Microsoft showcases in-house technology. Buy stock?

Microsoft (NASDAQ: MSFT ) It was one of the first major tech companies to move into artificial intelligence (AI). However, this was done through a large initial investment in OpenAI and a partnership with a large language model (LLM) producer. It used OpenAI’s access to models to attract customers to its Azure cloud computing offering and power its AI-assisted co-pilots.

This helped boost growth, as Microsoft relied on another company’s AI technology, not its own. As OpenAI grew larger, it needed to move beyond Microsoft, and the relationship between the two companies changed. Microsoft still owns 27% of OpenAI and has an exclusive license to its models and intellectual property (IP) until 2032, but OpenAI is now working with other cloud providers. Amazon And letters.

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In an effort to reduce its reliance on OpenAI, Microsoft unveiled seven new in-house AI models at its Build developer conference. It said its flagship MAI-Thinking-1 model was created from scratch without any filtering from other AI models. Filtering is when an AI model is trained to act and reason like an already established, more complex model.

Using McKinsey benchmarks, Microsoft said that OpenAI’s GPT can outperform OpenAI’s GPT 5-5 while delivering 10 times better cost efficiency. Outside of its basic model, it also introduced models aimed at coding, image, voice and transcription among other areas.

Along with its own models, Microsoft can reduce costs by reducing payments to third-party AI modeling companies such as OpenAI. This will help improve margins and increase profitability.

Along with introducing its new AI models, the company also made it clear that it hasn’t forgotten about the race in quantum computing. At the event, it introduced its new topological quantum chip, Majorana 2. The new chip was developed with the help of Agentic AI and claimed to be 1,000 times more stable than its previous generations. It will have a scalable quantum computer by 2029.

Buy stock?

Microsoft shares have lagged in the past year. Investors are concerned about the software-as-a-service (SaaS) model and its aggressive costs for AI infrastructure, while not having its own high-end AI models or chips. The company is playing catch-up with both AI chips and models, but this is a good first step.

Overall, the company is in good shape depending on how entrenched the company is in the corporate space. A more serious entry into the AI ​​race is also a big positive. While the stock has fallen despite strong continued growth, I will be a buyer of its stock as it transitions from being an AI user to an AI creator.

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Jeffrey Seeler has held positions at Alphabet and Amazon. The Motley Fool has and recommends positions at Alphabet, Amazon, and Microsoft. The Motley Fool has a disclosure policy.

Microsoft showcases in-house technology. Buy stock? Originally Posted by The Motley Fool