Microsoft is making significant strides in its artificial intelligence (AI) efforts, aiming to close the gap with its cloud market leader, Amazon Web Services (AWS). Internal documents have revealed that the tech giant is developing its own cutting-edge AI chips as part of its long-term growth strategy for its cloud business. This move is expected to generate $10 billion in new revenue by 2030.
According to leaked internal presentations, Microsoft sees chip development as a key priority to bolster its AI initiatives and support its cloud infrastructure. The company is working on creating its own high-performance silicon chip, codenamed Athena, which it hopes will outperform the ones currently purchased from vendors. By developing its own chip, Microsoft aims to reduce costs and enhance the capabilities of its AI applications.
The chip development project aligns with Microsoft’s ambition to add $10 billion in revenue to its data and AI businesses over the next three years, bringing the total to $26 billion. The company’s broader objective is to achieve $500 billion in total revenue by 2030. This growth plan is fueled by Microsoft’s strong position in the global cloud server market, where it currently commands a 16% share, while AWS leads with 38% and Google Cloud Platforms trails behind with 8%.
Microsoft’s Azure cloud platform has long been the second-largest player in the cloud computing market, trailing behind AWS. However, AWS’s growth has recently been slowing down, reporting its slowest growth rate in the first quarter of 2023. In contrast, Microsoft’s Azure and other cloud services saw a 27% revenue increase in the same period. This opens up an opportunity for Microsoft to catch up with AWS by capitalizing on the growing demand for AI workloads in the cloud.
While Microsoft has invested billions of dollars in AI through its partnership with OpenAI and its ownership of ChatGPT, AWS has lagged behind in its AI efforts. This has led to skepticism from Wall Street analysts, who questioned the management’s commentary on AI during AWS’s earnings call. In response, AWS has launched its $100 million Generative AI Innovation Center to support customers in building and deploying generative AI solutions.
By developing its own AI chips and actively pursuing AI opportunities, Microsoft aims to maintain its growth momentum, extend its lead over Google Cloud Platforms, and narrow the gap with AWS. With the increasing importance of AI in the cloud computing market, Microsoft’s strategic focus on AI chip development positions it well for long-term success in the industry.
