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- Microsoft (NASDAQ:MSFT) has been at the forefront of the generative artificial intelligence revolution, and a deeper dive suggests that the efficiency of its spending is close to year four or five of its Azure build out, Goldman Sachs analysts said.
- Despite the fact Microsoft is roughly a year into its roll-out of its generative AI initiatives, the company has been able to match its sharp increase in spending with “tangible” AI revenue, the analysts said. As such, the worries of a decline in gross margins are likely overblown, the analysts added, and AI-related spending could add $25B or more in revenue this year.
- Additionally, Microsoft should reach “critical scale” in capex spending for AI at a significantly faster clip than it did with Azure (which took 7 years), perhaps in the next two or three years, the analysts added.
- Microsoft shares were up 0.5% in early morning trading.