Here are three key takeaways from Microsoft's bullish AI event

Published Fri, Nov 17 20231:41 PM EST

Microsoft 's (MSFT) annual IT conference this week solidified its leading position in the race to dominate artificial intelligence after unveiling a slew of new developments. And, if history is any guide, the Club expects the software giant's new investments to further boost its long-term growth prospects. During Microsoft's Ignite conference in Seattle this week, the software giant announced its foray into the AI processor market with two new chips , a deepening partnership with leading AI chipmaker Nvidia (NVDA), additional features for AI assistant 365 Copilot and more. Microsoft remains highly profitable despite its massive investments in AI, posting late last month its largest earnings beat since July 2021. Shares have since notched all-time highs , boosted by startup OpenAI — whose technology powers several of Microsoft's AI offerings — announcing its most powerful tool to date at the start of November. Microsoft has invested $13 billion in OpenAI, which developed the viral ChatGPT. Here are the Club's top-three takeaways from Microsoft's Ignite conference, along with what Wall Street's saying about the event . MSFT YTD mountain Microsoft (MSFT) year-to-date performance First, Microsoft unveiled a number of updates for Copilot. The generative AI assistant , which the company started selling widely on Nov. 1, works as an add-on for its suite of Office apps like Word and Excel. On Wednesday, Microsoft announced an extension of its Copilot Studio service, integrating data from business software providers ServiceNow and Workday to offer new capabilities for customers. During Teams meetings, for example, users will be able to automatically create visualizations of concepts co-workers discuss. These additions continue to reinforce the Club's take that Copilot is worth the $30 monthly cost. We're even more optimistic after Microsoft released data quantifying productivity gains for Copilot users. Overall, customers spent 64% less time on tasks such as processing emails, according to a survey conducted by the company, while 70% said they were more productive with Copilot. At the same time, Microsoft Wednesday confirmed reports it is developing its own custom AI chip , called Maia 100. The highly-anticipated product could reduce Microsoft's costly reliance on Nvidia's AI graphics processing units (GPUs), but we don't expect this to pose any real threat to the fellow Club name. "Microsoft did not disclose the performance of Maia, leading us to believe it is inferior to Nvidia's chip," Jeff Marks, the Investing Club's director of portfolio analysis, said. "Performance is what matters most to us in this cut throat industry." Microsoft also unveiled a general-purpose chip based on Arm Holding 's (ARM) designs, referred to as Cobalt . Both Maia and Cobalt will be deployed early next year, supporting offerings like Copilot. Lastly, Nvidia CEO Jensen Huang made an appearance at Ignite on Wednesday. The chief executive said generative AI could one day be " bigger than the internet, by far ," while announcing joint AI projects with Microsoft. The companies unveiled a new offering called the Nvidia Generative AI Foundry Service for business customers. The service will allow users to create custom generative AI applications using Nvidia's tools and solutions and deploy them on Microsoft's cloud-computing platform, Azure. "This Ignite conference made news every day," Jim Cramer said Friday. "Ignite ignited the stock again. Microsoft stock has been the best." Although Microsoft shares were down around 1% Friday, the company's stock has surged more than 12% over the past month and more than 54% year-to-date. Wall Street was bullish on the conference, too. Analysts at Jefferies said that Microsoft is "innovating across all fronts at a record pace," according to a Thursday research note, adding that Copilot will likely drive revenue higher in 2024 on increased user interest. Elsewhere, Goldman Sachs argued in a research note Wednesday that "further establishing itself within the hardware and infrastructure layer extends Microsoft's broad range of Gen-AI services across the IT stack and builds on Microsoft's momentum as a key-Gen AI leader." (Jim Cramer's Charitable Trust is long MSFT, NVDA . See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Microsoft CEO Satya Nadella speaks during the OpenAI DevDay event on November 06, 2023 in San Francisco, California. OpenAI CEO Sam Altman delivered the keynote address at the first ever Open AI DevDay conference.

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