There's an 'AI arms race' and Microsoft's ChatGPT play is 'a capability game-changer,' says Wedbush's Dan Ives

Microsoft is even in talks with Start AI, the creator of the popular AI chatbot known as ChatGPT that took the market by storm about a week ago, to speculate as unprecedented as US$10 billion in the company, Bloomberg reported for the first time this week, citing unnamed sources. Wedbush technology analyst Dan Ives called ChatGPT one of the “most innovative AI technologies” in history and “a game-changer of capabilities” for Microsoft in a Wednesday demo to customers. “We have secured this strategic funding as a brilliant poker hand in this AI arms race that is being recounted globally,” he wrote, arguing that Microsoft is getting into a “base AI play” for customers. (Microsoft shares are up nearly 3% this week, but have fallen about 25% over the past year amid the broader durability market. However, Ives mentioned that OpenAI’s technology will have major implications across the technology, and he believes it will also be “fully integrated” across the entire product suite over the next decade. This isn’t the first time Microsoft has jumped into the AI reckoning. Broad Tech has been ramping up its AI tech for years (check out VALL-E, the AI that can clone your thunder after hearing a three-part audio clip) and even invested $1 billion in OpenAI in 2019 to help it invent new AI-enabled supercomputing technologies for its cloud platform, Azure. Now, with OpenAI raising funds at a valuation of $ 29 billion and attracting more than 1 million Customers For ChatGPT, not until weeks after its early December launch, Microsoft is taking another bite out of the apple as well — and Ives believes it’s the final move. “While ChatGPT is naturally a major cash-burning pain today, we viewed this as a strategic step for Nadella & Co. CEO Satya Nadella. Ives mentioned that Microsoft is about to incorporate ChatGPT into Diagram's business suite and threaten Google's search engine dominance by commanding the ability to present a search results solution to customers. Bing currently represents 31% of the global search engine market compared to Google's 9%, according to Statcounter. However, Ives believes it could be a good deal if the company were willing to provide “more advanced search capabilities and language models.” Ives also argued that Microsoft would also be in a position to control OpenAI’s technology in its video game division. Microsoft is currently in the process of acquiring Activision Blizzard, the only one in each of the bigger gaming companies on this planet, for $ 69 billion. On the other hand, it encountered obstacles both with the UK Rivals and Markets Authority (CMA) and with the US Federal Alternate Rate (FTC), who argue that the acquisition would suppress rivals in the gaming industry. “Here is another step for the company to double down on its gaming initiatives with these capabilities, finding additional strategies in the video game and digital art industries,” Ives wrote, arguing that Microsoft will still be successful in its “fight” with the FTC. However, not all Americans are so optimistic about AI’s potentially revolutionary moment. Some critics have called ChatGPT harmful., and the speakers began to marvel if the chatbot maps the college writing break. Tesla CEO, Elon Musk, who has already become an early backer of OpenAI, has already described AI as a whole as “summoning the demon” in a 2014 interview. Musk called ChatGPT “horrible and beautiful” in a Dec. 3 tweet after its launch, adding that “we’re not far from dangerously accurate AI.” But for users, Ives believes AI advancements in general are a goldmine, and Microsoft will be one of the beneficiaries. He holds an “Outperform” rating on the stock — related to a Buy rating — and a 12-month target of $290.