Moffettnathanson Estimates Microsoft Could Earn $10 Billion From AI Search

As much as $10 billion is expected to be brought to Microsoft's business from artificial intelligence.

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According to MoffettNathanson, search is the biggest business in the world.

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In the past few weeks, the tech giant has launched a new version of Bing, its search engine launched in 2009, powered by OpenAI's ChatGPT chatbot. Google had already launched its own version of the chatbot following the intense interest around it. A follow-on service was also revealed by Baidu this week, and it has been in development for some time.

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Sterling Auty, an analyst at MoffettNathanson, wrote in a note to investors on Thursday that "we believe that the AI-powered Bing could be the catalyst that encourages people to use the often maligned [Bing] search engine again." There had been a positive response to the AI-powered Bing during the previous quarter.

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"If Microsoft managed to acquire 10% market share, that's an incremental $19 billion in revenue," said one analyst. "If the upgrades to Bing succeeded to take 5% market share, that's an incremental $9.5 billion in revenue for Microsoft."

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It's widely believed that Google holds close to 85% of the search engine market share, but MoffettNathanson stated that there are varying opinions. There are differing estimates of the number of searches that Bing will receive from 3% to 10%. Auty noted that 10% is the most commonly cited number.

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Over the past four quarters, MoffettNathanson estimates that news and search revenue at Microsoft exceeded $10 billion, and Microsoft management has mentioned a desire to increase it to $20 billion in the coming years. As of now, the company has a target of reaching $20 billion in revenue over three years.

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As a result of Bing's announcement, you can imagine that the public will now be expecting Microsoft to reach that target much more likely, and we also believe that the search and news segment will become an additional driver of Microsoft's growth over the next few years," Auty concluded.