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Why Google, Apple, and Other Competitors Will Find It Difficult to Match Microsoft's Newest AI Capabilities

March 17, 2023
minute read

Microsoft is extending the use of artificial intelligence in its main office productivity suite beyond search. According to analysts at Oppenheimer, Google and other tech firms developing their own AI products may struggle to catch up.

Microsoft MSFT +2.05% (ticker: MSFT) benefits from having a good working relationship with OpenAI, the company that created ChatGPT, and from having access to the data of around 1.5 billion people, as per Oppenheimer.

This could indicate that Microsoft's 365 Copilot, the AI platform it unveiled on Thursday to work with programs including Word, Excel, PowerPoint, Outlook, and Teams, will maintain its apparent advantage in AI-enabled services.

Both Salesforce CRM +0.07% (CRM) and Alphabet GOOGL +2.38% (GOOG), the parent company of Google, made statements this week about artificial intelligence, according to Oppenheimer analysts. Although Microsoft is the largest investor in OpenAI, they claimed that Salesforce's usage of ChatGTP technology will amount to an "indirect subsidy" for the company. Copilot will employ GPT-4, the most recent iteration of the technology underlying ChatGPT, according to Microsoft.

Comparing its use in search engine Bing, where it has relatively little to lose given its low market share against Google, to its incorporation of AI tools into its office productivity package is both a statement of confidence and a possible risk. Analysts, though, were enthused about its initial showing.

Mizuho Securities analysts predicted that Microsoft 365 Copilot will significantly increase users' productivity. “We think that over time, Microsoft will significantly commercialize its larger generative AI programs as well as Microsoft 365 Copilot.”

Stock futures for the S&P 500 fell 0.6% in premarket trading on Friday, while Microsoft shares rose 0.5%.

Additionally, other companies are rushing to incorporate AI technology into their offerings. Friday in Hong Kong, shares of Baidu (BIDU), frequently referred to as "China's Google," rose 14% as analysts expressed optimism around the introduction of its "ERNIE" AI chatbot. Investors were first upset that there was no live engagement with the device at the public demonstration of ERNIE on Thursday.

Jamie Chen, an analyst at Third Bridge, wrote in a research note that Baidu is "more likely to succeed in duplicating ChatGPT in China because it is ahead of competitors in AI large model technical accumulation, and it controls a lot of Chinese data in its search engine". According to "our experts," it will take Chinese competitors two to three years to create models that are 80% as effective as ChatGPT.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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