Oppenheimer sees Microsoft leveraging ChatGPT white-space potential

Oppenheimer analyst Timothy Horan notes that The Information reports that part-owner Microsoft is preparing to launch a "ChatGPT-powered Bing in Challenge to Google." This move is compelling to Microsoft for myriad of reasons, but primarily because the substantial computational intensity makes it a demand funnel for Azure, the analyst argues. He expects dozens of new services from OpenAI/ChatGPT leveraging Azure’s robust infrastructure in a virtual cycle. These services will include true digital assistants, AI-based legal, accounting, financial services, and dozens more. This consumer AI will then be used in enterprise in equally surprising ways, Horan contends. The analyst notes that Microsoft’s stock fell on January 4 on concerns that cloud growth is in secular decline, a view with which he disagrees. Horan has an Outperform rating on the shares with a price target of $265.