Thoughts on Microsoft AI strategy

US Market & Sectors
1

FT article: https://archive.is/siA0a

Microsoft acquires twice as many Nvidia AI chips as tech rivals. OpenAI’s biggest backer buys nearly half a million GPUs this year in global race to build artificial intelligence systems.

From the article it seems like msft is only at the beggining of the long journey to build AI chips. google has one, amazon is soon deploying millions of their chips.

They are giving a lot of money to nvidia for chips that will be deprecated in a few years.

They are late in the game and spending a lot of their profits on catching up. But this will take years.

2

Here’s my take

From Bull’s eye

  • Microsoft may not have its own AI chips yet, but its strength lies in software and ecosystem integration (e.g., Azure, OpenAI, and enterprise solutions). Their approach could be to dominate AI applications and services while leaning on Nvidia in the short term for hardware.

  • The AI race is about who can build the most comprehensive ecosystem—hardware, software, and data. While the costs of Nvidia chips are steep and might be short-lived, it’s a necessary step for Microsoft to remain competitive, especially with OpenAI as a critical partner.

  • Microsoft is spending a lot now, but it’s a calculated bet to stay in the AI race. If they can play to their strengths (software, cloud, partnerships), they might not need to win the chip game immediately to succeed in AI. It’s about timing their move to self-sufficiency right.

Bear perspective

  • If Microsoft fails to transition to their own chips, they’ll be at the mercy of Nvidia’s pricing and technology roadmap.

  • It’s a race against time—if AI systems evolve faster than their chip strategy, they could lose their edge.

1 Like