Privately held OpenAI released GPT-4 on Tuesday, a year after version 3.5. GPT is an abbreviation for generative pre-trained translator. It uses artificial intelligence to produce human-like responses to questions and commands. It also powers the busy application ChatGPT.
Microsoft is a major investor in OpenAI and uses GPT-4 to power its Bing search engine and other applications. GPT-4 runs on Microsoft’s Azure cloud computing infrastructure.
Oppenheimer analyst Timothy Horan reiterated his outperform rating on Microsoft shares following the GPT-4 news. He also kept his price target on Microsoft shares at 280.
Microsoft shares rise on AI news
In the stock market today, Microsoft shares rose 1.8% to 265.44.
With GPT-4, the technology moves from research to the commercial phase, Horan said in a note to clients. It will increase demand for Azure and improve Microsoft’s positioning in AI in general, he says.
However, Microsoft is still working on cracking GPT-4 in Bing, Horan said. Answers are more accurate but much slower with the new AI engine, he said.
In addition to Microsoft, other companies that use GPT-4 include Duolingo (DUOL), Stripe and Morgan Stanley (MS).
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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