Microsoft Pulls Ahead In AI Race With Key Partnerships Across OpenAI, Nvidia, And Elon Musk's xAI

Benzinga
2025.05.27 23:37
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Microsoft Corp has strengthened its position in the AI sector through partnerships with OpenAI, Nvidia, and Elon Musk's xAI, targeting Azure cloud clients. At the Build conference, Microsoft showcased new AI products, including the Copilot assistant and plans to integrate rival AI models. CEO Satya Nadella highlighted a significant platform shift in technology. Analysts predict Microsoft Cloud revenue will exceed $300 billion by fiscal 2029, supported by tiered pricing strategies for AI tools. MSFT stock rose 2.33% to $460.69 on Tuesday, reflecting positive market sentiment.

Microsoft Corp MSFT showcased new products and collaborations with OpenAI, Nvidia Corp NVDA, and Elon Musk’s xAI. These companies target Microsoft Azure cloud computing infrastructure clients to sell AI models, the Financial Times reported on Sunday.

Microsoft held its annual Build conference in Seattle, where it showcased a coding “agent,” among others.

Microsoft integrated OpenAI models into Microsoft products, such as the Copilot AI assistant. It also plans to offer OpenAI rivals Anthropic’s Claude Code and AI’s Grok AI models to its cloud computing customers.

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Microsoft chief Satya Nadella said the technology industry was in the middle of ‘another platform shift,’ drawing parallels with the transformation associated with the Internet.

OpenAI chief Sam Altman, Musk, and Nvidia chief Jensen Huang made virtual appearances during the conference.

After signing a Microsoft Azure Foundry deal, Musk said Microsoft customer feedback would influence xAI’s Grok models. Huang also announced its collaboration with Microsoft for an AI supercomputer.

Altman announced deep integration between its Codex coding agent and Microsoft GitHub’s computer programming tool.

Goldman Sachs analyst Kash Rangan told the Financial Times that Microsoft is the AI ringleader, indicating that it is the top platform and catalyst for making models work.

Microsoft stock surged 8% year-to-date, in contrast with the decline of the “Magnificent Seven” U.S. Big Tech stocks like Apple Inc AAPL, Amazon.com Inc AMZN, and Alphabet Inc GOOGL, as President Donald Trump’s tariff policies weighed on the U.S. stock market.

Amazon and Google also adopted Microsoft’s similar strategy. However, analysts vouched for Microsoft’s moat, backed by its suite of AI offerings.

Last week, Rangan said Microsoft Cloud will generate over $300 billion in revenue by fiscal year 2029, up from under $140 billion at present. Microsoft is using the same strategy of creating tiered pricing for its AI tools, which will lead to steady growth and stronger margins, according to the analyst.

As products like Microsoft 365 Copilot and Dynamics AI become more powerful, businesses may be more willing to pay for them, Rangan added.

Price Action: MSFT stock closed higher by 2.33% to $460.69 on Tuesday.

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