Microsoft is experiencing its iPhone moment: it is already worth three billion dollars

Scott Guthrie, one of Microsoft's most veteran programmers, was looking for an example a few weeks ago to illustrate the furor that artificial intelligence has caused by the company's products, which recently surpassed the three billion dollar barrier and has taken over Apple the scepter as the most valuable company on the stock market in the world.

Guthrie, who leads Azure, the tech giant's cloud

computing

platform , goes back several decades.

He said the high demand is similar to the high expectations sparked by the launch of Windows 95, the program that promised to revolutionize home computing and whose release caused lines at the entrance to stores.

Perhaps for the youngest people, who do not know what it is like to wait in line to buy an operating system, that comparison will not work, and they will better visualize what artificial intelligence (AI) has meant for the company created by Bill Gates if the reference is the fury that arouses in consumers the launch of each new mobile model that Apple makes.

And yes, Microsoft is living its iPhone moment.

The giant based in Redmond (Washington, USA) presented the results of its second quarter last week (it has a fiscal year that does not go with the calendar year and ends in June).

A period where it recorded record numbers thanks to its cloud services.

Between October and December, Microsoft had a turnover of $62.02 billion, 17% more, and increased its profits by 33% to $21.87 billion.

“We have gone from talking about artificial intelligence to applying it at scale in all layers of our offer,” said Satya Nadella, CEO of the company, during his conference with analysts.

Microsoft has been trying to sell itself to the public as an AI company for months.

For this reason, in October the head of Marketing was relieved after almost a decade in office.

The witness was taken by Takeshi Numoto, Azure's sales manager.

The shares have risen 57% in the last year and the market capitalization is 3.08 trillion dollars (more than three times the sum of all listed Spanish companies).

This interest from investors largely responds to the agreement that Microsoft has had since 2019 with OpenAI and its flagship product, ChatGPT.

The agreement between the parties was extended last year "long-term", in an operation in which the firm chaired by Sam Altman secured revenues of 13 billion dollars.

Each Microsoft share is worth $414, but analysts continue to see potential for additional appreciation.

Dan Ives of Wedbush Securities, a Los Angeles investment firm, places his price target at $450, 8.6% above his current valuation.

Microsoft CEO Satya Nadella at a presentation in Las Vegas in January.Ethan Miller (GETTY IMAGES)

Amy Hood, the company's chief financial officer, said last week that a good part of the benefits achieved by Azure were generated by the increased use of AI.

The company expects this trend to continue in 2024 as more and more companies are incorporating this technology.

In fact, at the end of January it was announced that Vodafone will invest $1.5 billion in the cloud platform to transform the digital experience of 300 million users.

Microsoft's second youth has, however, its darker side.

The technology giant laid off more than 20,000 employees in 2023, mainly salespeople and members of the Customer Service area.

Recently, the company announced another cut in Microsoft Gaming, its gaming division, where it laid off 1,900 employees, 8% of the total.

Most worked at Activision Blizzard, a company acquired last year.

To establish itself at the forefront of the AI ​​revolution, a position that Microsoft leads along with Nvidia and AMD, the company aims to not only attract large companies as clients, but also medium- and small-sized corporations.

In this sense, last June Copilot began to be marketed, a program that uses ChatGPT 4 as an engine and is aimed at small businesses.

Along these lines, Microsoft launched last December a $20 subscription focused on entrepreneurs looking to automate their companies.

“The results have been impressive,” said Rajesh Jha, vice president of Experience and Devices, at an event organized by Barclays last month.

“Between 68% and 72% of users recognize that Copilot made them more efficient and improved the quality of their work, allowing them to focus on what is inherently human work: creative, reflective or collaborative… More than 55 % of users feel more creative with AI,” Jha stressed.

Microsoft says it has 1.3 million subscribers to its GitHub Copilot service, which allows programmers to write code with the help of AI.

The program has grown 30% in subscribers in the last three months.

The strategy until the end of 2023 was to sell the tool to large companies for a minimum subscription of $300 per month ($30 per user).

But Copilot will also be available to all those who have Office in the cloud, and they will be able to use it to create content in the company's programs such as Excel, PowerPoint and Office, which has 400 million paid downloads.

One in three users of the Microsoft 365 platform says that AI does research, writing and summarizing tasks faster.

In the last two months, Microsoft has signed contracts with companies such as Honda and Pfizer to make Copilot available to all their employees.

The company is convinced that the use of technology will be so everyday that it has made the first major modification to its keyboards in three decades to include a key that launches the assistant.

“In 2024, AI will be a first-class part of all computers,” said the company's top executive.

According to Nadella, AI has caused Windows downloads to increase by 50% year-on-year.

Yes, there are people lining up to use the latest Microsoft operating system.

Unlike Windows 95, no one sees these long queues.

And it's all thanks to the cloud and the popularization of AI.

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