As Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) upped the ante with its announcement concerning “Bard,” its ChatGPT equivalent, Microsoft Corp. (NASDAQ:MSFT) has reportedly teased an event to be held at 1 p.m. EST on Tuesday to officially unveil ChatGPT integration into its ecosystem.

The Microsoft Analyst: Wedbush analyst Daniel Ives has an Outperform rating and $280 price target for Microsoft shares.

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The Microsoft Thesis: The OpenAI investment or strategic partnership valued at about $10 billion is a “game changer” for Microsoft as the ChatGPT bot is one of the most innovative AI technologies in the world today, Ives said in a note.

With Google aggressively looking to defend its search leadership with its beta AI tool Bard, Microsoft is aggressively going after the AI opportunity on both the Cloud and search fronts, the analyst said.

“We view this as the first shot across the bow in this Big Tech AI battle that is set to hit its next gear of investments over the coming months with Microsoft now leading the race,” he added.

The analyst noted that Bing currently has only about 9% of the search market. Integration of the ChatGPT tool and algorithms into the Microsoft search platform will likely result in a major share shift away from Google down the line, he said. OpenAI’s co-founder Sam Altman sharing the podium with Satya Nadella on Tuesday is a clear signal that Microsoft is looking to win this AI battle over the coming years.

The analyst also expects Microsoft to announce the integration of ChatGPT with its cloud services, including Azure. This would pose a threat to Amazon Inc. (NASDAQ:AMZN) and Google, he said.

Ives sees tech companies investing billions of dollars into the broader AI industry over the next 12 to 18 months. “Tomorrow [Tuesday] will be a big step for Microsoft and Nadella to flex their AI muscles with the Street watching closely this next avenue of growth in Redmond, he added.

Price Action: Microsoft closed Monday’s session down 0.61%, at $256.77, according to Benzinga Pro data.

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