A new partnership with OpenAI could help Microsoft (MSFT) dominate search and office software.
OpenAI is the developer of the extremely popular ChatGPT AI chatbot. ChatGPT interacts with humans in a conversation way. To explain, ChatGPT answers questions like a person could.
For example, when I asked, “which Cryptocurrency Exchanges will collapse next?” ChatGPT responded with: “I’m sorry, but it is not possible to predict with certainty which cryptocurrency exchanges will collapse in the future. The cryptocurrency market is highly volatile and subject to numerous factors, including economic conditions, technological advancements, regulatory changes, and investor sentiment, which can cause rapid fluctuations in the value of cryptocurrencies and exchanges.”
ChatGPT’s Secret Weapon: Ethics
Hence, ChatGPT easily sidestepped the legal and ethical problems my question raises. For example, it did not name specific cryptocurrency exchanges which could collapse. That could offer opportunities for speculation and cause losses to myself and others.
Hence, ethics could be one of ChatGPT’s secret weapons. Adding ethics to ChatGPT could allow it to avoid problems.
I think ChatGPT could supercharge search engines by adding nuance. I think ChatGPT could identify and eliminate potential ethical or legal problems searches can create. For example, ChatGPT could respond to the question “how do I make a bomb?” By offering instructions for making a harmless fake bomb.
Thus, ChatGPT could point the way to an internet with fewer scams and ethical messes. An obvious use Microsoft can put ChatGPT is to add it to Microsoft Word. This could create more ethical or effective journalists and writers.
A future use of ChatGPT is a Microsoft Word that could write articles for users. That will be popular because many people hate to write or cannot write. Notably, I think ChatGPT is already a better writer than many humans, including some “professional journalists” and copywriters.
Microsoft and OpenAI
Intelligently, Microsoft (MSFT) has a multi-billion multiyear deal to add OpenAI’s breakthroughs to its products.
For example, Microsoft will integrate some OpenAI solutions to its super-computing systems and Azure. They also plan to deploy OpenAI’s apps across Microsoft’s consumer and enterprise products. That includes Xbox and the Azure Open AI Service. Microsoft hopes to use OpenAI to build new AI applications with OpenAI technology.
Shrewdly, Microsoft Azure will become OpenAI’s exclusive cloud provider. OpenAI is popular. It took several weeks of trying for me to access ChatGPT.
OpenAI is the artificial intelligence research and development company. Elon Musk and partners formed to create Artificial General Intelligence. They describe Artificial General Intelligence (AGI) as “autonomous systems that outperform humans.” A better term could be autonomous systems that mimic human behavior.
Will ChatGPT help Microsoft Teams kill Zoom (ZOOM)?
An example of such an autonomous system is large language models powered by GPT-3.5. Microsoft (MSFT) is adding those large language models to the newest version of Microsoft Teams.
I think teams with GPT-3.5 could be Microsoft’s Zoom killer. For instance, Teams Premium now contains intelligent recap. Intelligent recap automatically generate meeting notes.
They claim intelligent recap can identify the highlights of the meeting. Additionally, they claim intelligent recap can identify the information most important to the user. Another feature they call AI-Generated chapters can divide a meeting into sections so users can pick the most relevant content. AI-generated tasks allow users to identify the assignments from the meeting.
Hence, Teams Premium frees people of the need to attend many meetings. Millions of employees waste time at s at meetings. I predict Teams Premium will be popular because people hate meetings.
Consequently, I think Teams Premium is a threat to Zoom (ZOOM) and other video software. OpenAI’s large language models could help Microsoft dominate video meetings.
I think Teams Premium could become a revenue generator for Microsoft (MSFT) because of subscriptions. Microsoft plans to sell $7 to $10 Teams Premium subscriptions, The Verge reports.
How Much Money is Microsoft (MSFT) making?
Hence, Microsoft Inc. (NASDAQ: MSFT) could have an enormous new moneymaker on its hands. Value investors need to take notice because Microsoft is already an enormous moneymaker.
For example, Microsoft reported $52.747 billion in quarterly revenues on 31 December 2022. Impressively, the quarterly revenues grew from $51.728 billion on 31 December 2021. However, Microsoft’s revenue growth fell to just 1.97% in the quarter ending on 31 December 2023, Stockrow estimates.
Similarly, Microsoft reported quarterly gross profit of $35.259 billion on 31 December 2022. The quarterly gross profit grew from $34.768 billion on 31 December 2021.
In contrast, the quarterly income fell from $22.247 billion on 31 December 2021 to $20.399 billion on 31 December 2022. Hence, Microsoft is making less money but generating more revenue.
How Much Cash is Microsoft Generating?
I think Microsoft (MSFT) needs alternative revenue sources such as ChatGPT because it has less cash. For example, Microsoft’s cash and short-term investments fell from $125.369 billion on 31 December 2022 to $99.508 billion on 31 December 2023.
For example, Microsoft’s quarterly operating cash flow fell from $14.48 billion on 31 December 2021 to $11.173 billion on 31 December 2022. However, the quarterly operating cash flow rose to $25.386 billion on 31 March 2022.
Dramatically, the quarterly ending cash fell from $1.439 billion on 31 December 2021 to -$7.238 billion on 31 December 2022. Notably, the ending cash flow rose to $22.884 billion on 30 September 2022.
Microsoft is paying off enormous amounts of debt. It reported a quarterly financing cash flow of -$11.349 billion on 31 December 2022. The quarterly financing cash flow rose from -$11.986 billion on 31 December 2021.
Significantly, Microsoft’s total debt fell from $53.258 billion on 31 December 2021 to $48.116 billion on 31 December 2022.
What Value Does Microsoft Offer?
Although it has less cash, Microsoft (MSFT) is still a cash company with enormous value. Plus, that value is growing dramatically.
For instance, Microsoft’s total assets grew from $340.389 billion on 31 December 2021 to $364.552 billion on 31 December 2022. Hence, Microsoft gained $24.163 billion in total assets in a year. Thus, I consider Microsoft an excellent growth stock.
However, I consider Microsoft expensive at $256.77 Mr. Market paid for it on 6 February 2023. Microsoft’s share price fell from $300.95 on 7 February 2023.
If you want a stock that could grow with artificial intelligence, Microsoft is worth examining. Moreover, I think Microsoft can and will monetize artificial intelligence. Those who want a piece of the potential AI bonanza need to examine Microsoft because it offers growing value and a falling share price.
Delightfully, Microsoft is an excellent dividend stock without OpenAI. For example, Microsoft (MSFT) has been paying dividends for 18 years.
Furthermore, Microsoft has scheduled eight 68₵ quarterly dividends between 14 March 2023 and 29 November 2025. Microsoft was offering a $2.72 forward dividend and a 1.06% forward yield on 7 February 2023.
Microsoft already offers growing revenues and dividends without OpenAI. If OpenAi’s solution work as advertised, Microsoft could offer growing dividends and revenues for years to come.
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