Gen AI Is Largely OpenAI and NVIDIA. Where Does That Put Microsoft?
NVIDIA (NVDA) is the AI chip king and OpenAI is the LLM and multimodal model king. The latter is running at a $3.4 billion revenue run rate as of early June as has been recently reported (see our earlier OpenAI revenue breakdown HERE). Approximately $200 million of the $3.4 billion is generated from OpenAI’s Microsoft (MSFT) relationship.
Therefore, where does that put Microsoft’s Gen AI-related revenue? $400 million? $600 million? MSFT will generate approximately $245 billion of revenue in the year-ending June 30th, and less than 1% of that Revenue is Gen AI-related. That paltry number, yet so much Gen AI hype.
If you wanted to view MSFT’s Gen AI revenue within the context of Azure, Azure’s running at what? A $60 billion revenue run rate? MSFT’s Gen AI effort is only 1% of Azure revenue, yet so much hype.
This is not to say that customers do not use MSFT’s core AI services (primarily machine learning). However, this “AI” equity bubble is specific to Gen AI, and Gen AI-related revenues are small Dollars outside of Open AI and NVIDIA.