A new AI trend has taken the internet by storm, and at least one Big Tech giant stands to make a killing.
Last week, OpenAI rolled out ChatGPT-4o, an upgraded image generator that users piled into to create images in the Japanese animation firm Studio Ghibli style. The trend is helping fuel a record spike in users, so much so that OpenAI is struggling to keep up.
The surge in ChatGPT users would benefit Microsoft because the spike boosts OpenAI’s growth, computing needs, and valuation, Jefferies analysts led by Brent Thill said in a note on Tuesday.
Microsoft is a major investor in the artificial intelligence firm and its primary cloud provider. The company also integrates OpenAI’s large language models into its products. Last week, Microsoft’s CEO, Satya Nadella, said the company may build its own generative AI capability to complement its partnership with OpenAI.
“We would glean that surging ChatGPT user growth likely indicates surging ChatGPT+ growth i.e. revenue growth for OpenAI,” the analysts wrote.
The analysts also touted OpenAI’s most recent funding round as beneficial to Microsoft. On Monday, OpenAI announced it closed the largest private tech funding round on record. The company raised $40 billion from SoftBank and other investors, bringing the company’s valuation to $300 billion. The ChatGPT maker was last valued at $157 billion in October.
Jefferies has a buy rating on Microsoft and a price target of $500. The stock closed at $382 on Tuesday. It is down 9.3% in the past year.
Record ChatGPT usage
ChatGPT has become a household name since its launch in November 2022, but last week’s animation trend sent demand soaring.
On Monday, OpenAI CEO Sam Altman wrote on X that ChatGPT had just added one million users in the past hour. At launch two years ago, it took five days to reach that number of users.
Last week, ChatGPT’s weekly app downloads, weekly active users, and revenue from subscriptions and in-app purchases reached an all-time high — increasing 11%, 5%, and 6%, respectively, week-over-week — according to data from market intelligence firm SensorTower.
Besides Microsoft, producers of graphic processing units stand to benefit from the Ghibli hype. Nvidia, AMD, and Intel are some of the biggest GPU companies.
“Working as fast we can to really get stuff humming; if anyone has GPU capacity in 100k chunks we can get asap please call!,” Altman wrote on X on Tuesday.
The Jefferies analysts said few vendors can deliver this much capacity and estimated that any deal with OpenAI could bring in $1 billion to $2 billion a year for the GPU provider.
