Key insights
- Microsoft's stock increased 3% following a report detailing its strategy to develop in-house AI models, reducing reliance on partners like OpenAI. This move aims to cut costs and enhance competitiveness in AI-powered features across its software suite. The company plans to unveil these new models at its Build developer conference, positioning them as cheaper alternatives to existing external options. This development could positively impact Microsoft's cloud and software segments, potentially influencing broader tech sector sentiment.
Investing.com -- Microsoft (NASDAQ:MSFT) shares rose 3% Thursday after The Information reported the company plans to release a new coding model next week as part of a broader push to reduce dependence on external AI partners.
The report said Microsoft will unveil a suite of in-house AI models at its Build developer conference in San Francisco. The lineup includes a coding model designed to help GitHub Copilot better compete with rivals like Cursor and Claude Code, along with other models specializing in reasoning, speech, transcription, and image generation.
Microsoft currently relies heavily on models from OpenAI, which it receives at no cost until 2032, and Anthropic to power its software. The company aims to build its own competitive AI capabilities to avoid dependence on expensive outside suppliers when its OpenAI agreement expires.
According to the report, Microsoft’s internal AI team, led by AI chief Mustafa Suleyman, was previously restricted from training top-tier AI models due to its deal with OpenAI. Those restrictions were renegotiated in April, enabling development of the new models.
Microsoft plans to market the new models as cheaper alternatives to the slightly more capable models from OpenAI and Anthropic. The strategy is also expected to help Microsoft lower costs of running AI features within its Office applications.
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