Microsoft's AI-Focused Innovations: Boosting Bing and Azure Services for Next Computing Wave

Oppenheimer analyst Timothy Horan reiterates Microsoft Corp MSFT with an Outperform and a $330 price target.
Two business positives out of the Microsoft Build 2023 developer conference: 1)Azure OpenAI customers now top 4500, up 80% from 2500 disclosed on April 25, "the fastest growing service in Azure history," and 2)Bing will be the default search engine on ChatGPT starting today for Plus users, with free tier "soon."
Microsoft announced 50 new products, highly AI-focused on leveraging the Microsoft and OpenAI partnership, although CFO Amy Hood, on the last earnings call, encouraged investors to still "think about [OpenAI]...like any other customer who would use the Azure infrastructure and our Azure AI services, in service of supporting their end customers."
The analyst did not change the estimate but has higher confidence in MSFT's revenue growth, accelerating back into the mid-teens by FY25.
Microsoft looks very structurally advantaged for this next large computing wave driven by AI, with Azure (AI/GPU optimized infrastructure), OpenAI (LLM), and network effects from first-party apps, a 1.5 billion-user Windows/Office and 100M-developer GitHub ecosystem.
Price Action: MSFT shares traded higher by 3.58% at $325.10 on the last check Thursday.

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