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Microsoft Launches Artificial Intelligence Research Lab

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Microsoft Corp. (MSFT - Free Report) recently announced the launch of Microsoft Research AI lab. It will focus on obstacles faced in the field of artificial intelligence (AI). Based at Microsoft’s headquarters in Redmond, WA, the research lab will involve more than 100 scientists related to various subfields including natural language processing, machine learning, visual perception and decision making, among others.

Notably, the AI technologies used today are dedicated to specific tasks. Microsoft’s idea is to combine these and form a single AI technology that will have a cognitive approach. Microsoft is also working on an Ethical Design Guide for AI development based on CEO Satya Nadella’s principles.

Microsoft also stated that it will be working with Apple’s (AAPL - Free Report) new application called Seeing AI meant for assisting blind people. Moreover, with the AI for Earth program, the company is using artificial intelligence to help organizations address environmental challenges related to water, agriculture, biodiversity and climate change. The company also committed $2 million for this initiative.

We believe Microsoft is going to benefit from its product and service portfolio that consists of AI, Azure and its cost restructuring methods such as proper resource allocation techniques. Notably, the company has outperformed the S&P 500 on a year-to-date basis. While the index gained 10.8%, the stock gained 16.8% during the same time period.

Can Microsoft Take Advantage of the AI Boom?

Per MarketsandMarkets, the AI market is anticipated to witness 69.2% compound annual growth rate (CAGR) from 2016 to 2022 and be worth $16.06 billion, at the end of 2022. However, lack of appropriate technical knowledge and relatively lesser awareness may impede its growth trajectory.

Microsoft was projected as an AI market leader for 2017 in a recent Value Walk article.  We believe that with its range of cognitive services and data and analytics platform, Microsoft is well positioned to enjoy the growth prospects in the space. We note that the company acquired Maluuba, an AI startup in Jan 2017, thereby enriching its product portfolio.

Going forward, Microsoft’s wide range of AI offerings is expected to add to its customer base, thereby boosting its top line and providing it with a competitive edge against peers like Amazon (AMZN - Free Report) and Alphabet (GOOGL - Free Report) .

Zacks Rank

Currently, Microsoft holds a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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