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Microsoft unveils GPT-4o for Azure, new AI apps in fight against Google, Amazon

Microsoft (MSFT) on Tuesday debuted a host of new AI features during its Build conference in Seattle, including OpenAI’s new GPT-4o, a trio of small language models, and Microsoft’s new Cobalt 100 CPU.

The announcements come as Silicon Valley turbocharges its AI investments and tech giants like Microsoft, Google (GOOG, GOOGL), Amazon (AMZN), Meta (META), and Apple (AAPL) race to outmaneuver one another during the biggest tech scramble in years.

Microsoft offering OpenAI’s GPT-4o through its Azure AI Studio was the company's biggest announcement on Tuesday.

The model, which OpenAI debuted during a live-streamed event last week, is multimodal and can understand inputs via text, audio, and video. That demo has since become embroiled in controversy after actress Scarlett Johansson on Monday demanded the company change the voice of its chatbot, which OpenAI featured answering questions.

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Microsoft’s news also comes a week after Google debuted a slew of AI products during its I/O developers conference, including a new version of Google Search with generative AI-based responses to users’ queries.

Microsoft CEO Satya Nadella speaks during an event titled
Microsoft CEO Satya Nadella speaks during an event titled "Microsoft Build: AI Day" in Jakarta, Indonesia, Tuesday, April 30, 2024. (AP Photo/Dita Alangkara) (ASSOCIATED PRESS)

Microsoft said users will now be able to develop their own copilots — essentially AI-powered programs — using GPT-4o to make apps that can respond to images, voice, and text. The Windows maker also said it will make its preview of Copilot in Azure available to all customers in the next couple of weeks.

Microsoft also showed off its Phi-3-small, Phi-3-medium, and Phi-3-vision small language models. Designed to run on devices, the Phi-3 models don’t need to connect to the web, allowing users to access them in environments where they otherwise wouldn’t be able to run cloud-based models like GPT-4o.

Phi-3-vision is especially interesting, as it allows users to input images and text and then receive information about them via text outputs. So, for example, users will be able to do things like ask questions about charts, graphs, or images without needing to jump online.

Microsoft 365 is also getting copilot upgrades, with Copilot for Microsoft 365’s new Team Copilot. The app, Microsoft says, can manage meeting agendas and take notes, summarize Teams chats and answer questions related to those conversations. The app can also track user deadlines and notify individual team members when they need to take action.

In addition to new software and developer capabilities, Microsoft also said it will begin previewing Azure virtual machines running on the company’s new Arm-based Cobalt 100 cloud CPUs.

Virtual machines are basically software-simulated versions of computers. So, instead of having to run 50 individual desktops, you can run 50 virtual machines on a high-powered server.

Microsoft claims that its Cobalt 100 chip provides 40% better performance than prior ARM-based virtual machine systems. In addition to the Cobalt 100 CPU, the company says it will begin offering AMD’s (AMD) MI300X chip for developers looking to train and deploy AI apps.

All of this is part of Microsoft’s effort to continue growing its cloud business through AI apps. Google and Amazon are using a similar strategy to expand their respective cloud empires as well, but Microsoft's multibillion-dollar investment in partner OpenAI has helped catapult the company to the top of the AI discussion.

In its most recent quarter, Microsoft said its AI products contributed 7 percentage points of growth to its Azure and other cloud services revenue. That was up from 6 percentage points in the prior quarter.

A year ago, Microsoft first broke out its AI percentage contributions to Azure, saying it added 1 percentage point to Azure revenue at the time.

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Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

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