Microsoft (MSFT - Free Report) and LG Electronics (LG) recently inked a memorandum of understanding (MoU) at CES 2019. Per the agreement, Microsoft’s Azure cloud platform and robust artificial intelligence (AI) capabilities will be utilized by LG to enhance its self-driving software.
With this new deal, LG attempts to strengthen its autonomous vehicle digital platform and infotainment system domain. The strategic alliance is primarily aimed at capitalizing on the growth prospects of the emerging Advanced Driver Assistance Systems (ADAS) market.
In the words of Kim Jin-yong, president of Vehicle Component Solutions Company at LG, “We’re confident that the combination of Microsoft and LG technologies will create a new benchmark in autonomous auto AI.”
We believe, Microsoft’s dynamic push to infusing AI capabilities in Azure cloud, positions it well to gain an edge over peers, such as Amazon’s (AMZN - Free Report) Amazon Web Services (AWS) and Alphabet’s (GOOGL - Free Report) Google Cloud et al.
Strength in Azure & AI: Key Catalyst
Specifically, the built-in AI-based self-driving software in LG’s ADAS platform, powered by Azure, is expected to accelerate performance of Multi-Purpose Front Camera and Driver-Status Monitoring Camera (DSM) devices.
Moreover, LG’s plans to integrate Azure’s voice-enabled Virtual Assistant Solution Accelerator into its infotainment systems, deserves a special mention.
Further, LG will utilize the latest Azure Data Box to generate a library wherein data collected on the road is updated automatically on a dynamic basis.
The enhanced data set coupled with Azure-supported graphics processing unit (GPU) and high performance computing (HPC) are expected to make the autonomous-driving system even smarter (with accelerated data analytics processes).
Abundant Market Prospects
Microsoft is optimistic about this latest contract with an aim to offer automakers intelligent systems, enabling them to build safer and sustainable new-age vehicles. In fact, the tech giant is leaving no stone unturned to optimally exploit the autonomous vehicle industry’s immense potential.
Through partnerships and collaborations, the company is driving innovations to boost this initiative. Notably, it has collaborated with Volkswagen AG and Mapbox Inc (a mapping startup) to name a few, in this regard.
Per BI intelligence, 10 million self-driving cars will take to the road by 2020. Meanwhile, Boston Consulting Group anticipates the autonomous car market to be worth $42 billion by 2025 and $77 billion by 2035.
This notable development is also forecast to favor Microsoft’s growth potential in the automotive infotainment market, which is reportedly projected to attain $40.17 billion value by 2024, per Hexa Research.
That the adoption of Microsoft’s Azure has been robust is evident from its strong customer base. Azure has already been selected by the likes of Volkswagen, The Kroger Co, Walmart, Royal Dutch Shell PLC to mention a few. In fact, in the first quarter of fiscal 2019, Azure revenues soared 76% at constant currency (cc) on a year-over-year basis.
The new partnership adds to Azure’s growing clout and is expected to contribute to the company’s top-line improvement.
Moreover, Microsoft’s strategic buyouts including XOXCO, Semantic Machines, Bonsai, Lobe, GitHub among others bode well. These acquisitions are enabling the company to add notable AI features on a regular basis to various applications, evidently strengthening its portfolio.
These initiatives are enabling the company to gain a competitive edge in the AI market, which per MarketsandMarkets, is envisioned to rake in $190.61 billion by 2025 at an approximate CAGR of 36.6% from $16.06 billion, valued in 2017.
Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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