ChatGPT-4 increases demand for Microsoft’s Azure – Oppenheimer

By Sam Boughedda

OpenAI released its GPT-4 model on Tuesday, resulting in much debate surrounding how the improved model could impact society after OpenAI said it exhibits “human-level performance” on several academic and professional benchmarks.

Here’s how analysts reacted:

In a note on European semiconductor stocks, Credit Suisse analysts told investors in a note that OpenAI said that Microsoft’s (NASDAQ:) Bing AI search is using the new GPT-4 model already.

Considering the impact, the analysts said they “see ASML and ASMI as critical enablers and beneficiaries of the significant amounts of computing power and storage that will be required for enabling widespread adoption of generative AI.”

“Despite releasing GPT-4 access initially to paid subscribers only, OpenAI notes that it expects GPT-4 access to be ‘severely capacity constrained’,” the analysts added. “Open AI also intends to offer some amount of free GPT-4 queries so that those without a subscription can try it too. We think OpenAI’s comments bode well for demand trends for ASML/ASMI.”

Morgan Stanley analysts told investors that early indications “demonstrate a step-function improvement in accuracy and reasoning capabilities, which open up new use cases.”

“We believe that advances in model capabilities will drive an even faster acceleration in developer, business, and end-user adoption of these new AI tools,” they added.

Oppenheimer analysts believe GPT-4 increased demand for Azure and improves commercial prospects for ChatGPT and Microsoft’s position in AI in general.

“For Microsoft, 4.0 should increase Azure demand funnel (more compute), still poses possible step-change improvement of productivity franchise, augment Search, and bear-hug of OpenAI places it in pole position for AI platform shift,” they explained.