Deal With OpenAI Is Key for Microsoft: Alger’s Crawford

AI Partnerships & Strategy - Microsoft's partnership with OpenAI is considered highly significant, extending the partnership's time horizon due to OpenAI's underlying technology development [1][2] - The partnership ensures OpenAI has the necessary compute bandwidth, allowing Microsoft to generate revenue from generative AI while retaining access to the IP [3] - The market opportunity for AI is estimated to be in the hundreds of billions of dollars, if not greater [5] Infrastructure & Investment - The industry is currently in a ramp-up phase of building AI infrastructure, which needs to be in place before AI can be effectively deployed to companies [7] - The build-out of AI infrastructure is expected to continue for another 2 to 3 years [8] - Companies are expected to increase their CapEx estimates in the coming year, indicating continued investment in infrastructure [8] - Capital expenditure on infrastructure is expected to translate into revenue over the next few years [9] Market Dynamics & Competition - The industry is observing how OpenAI and Anthropic are framing the market and assessing their revenue potential based on their capacity needs [4] - There's a shift from investing solely in infrastructure to investing in companies that are deploying and benefiting from AI [7]