Microsoft Invests $1.5 Billion in an AI Company: Here's What Investors Should Know – The Motley Fool

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Microsoft just made a deal with a company based in the United Arab Emirates.
More than any other big tech company, Microsoft (MSFT -2.45%) has been unabashedly aggressive in artificial intelligence (AI). It forged a partnership with OpenAI in 2019, investing $1 billion in the AI start-up when it needed a funding source, and it invested another $10 billion in OpenAI in early 2023, shortly after that company launched ChatGPT, bringing its grand total to an estimated $13 billion that it has invested in OpenAI.
Microsoft even hired Sam Altman when he was briefly fired as OpenAI CEO, though he returned to his company a few days later after OpenAI installed a new board. More recently, it hired Mustafa Suleyman, one of the most respected minds in AI, after his company Inflection AI folded. Suleyman is now CEO of Microsoft AI, and the tech giant hired several of his associates from Inflection AI as well.
Now, Microsoft is at it again, making another big move in AI. Here’s what Microsoft is doing — and what it could mean for investors.
Image source: Getty Images.
The company announced on Tuesday that it’s making a $1.5 billion strategic investment in G42, an AI holding company based in the United Arab Emirates.
In some ways, the deal resembles the partnership Microsoft made with OpenAI, or what Alphabet and Amazon have done with Anthropic by investing billions in that AI start-up. In addition to the investment, Microsoft’s vice chairman and president, Brad Smith, will take a seat on G42’s board.
The partnership seems designed to give Microsoft greater exposure to AI in developing markets like the Middle East. The two companies said they would work to ensure that AI technologies and cloud computing capabilities were shared with growing economies around the world.
In particular, the companies said they would bring advanced AI and infrastructure to regions like the Middle East, Central Asia, and Africa. Doing so could help unlock valuable markets for Microsoft and give it an advantage over other tech leaders.
The two partners have collaborated in the past. Last November, Microsoft made G42’s Jais Arabic large language model available on Azure, and last April, the two companies made a joint plan to develop AI solutions for the public sector and industry.
G42 is a relatively new company, founded in 2018, but it’s grown quickly and now has 22,000 employees. The company’s stated mission is “to invent visionary artificial intelligence for a better everyday.”
It provides a suite of solutions including digital infrastructure and cloud computing, and AI research. It also has industry solutions through a suite of subsidiaries like Bayanat, which is developing geospatial intelligence, and M42, which is focused on the medical field and aims to improve clinical and diagnostic health.
G42 has also formed a number of joint ventures and is a minority investor in several start-ups.
A $1.5 billion deal is significant for any company, but the partnership won’t move the needle for a company the size of Microsoft, which is valued at more than $3 trillion.
Still, the arrangement with G42 shows that Microsoft is committed to staying on the cutting edge of AI, through both its own internal activities, and through partnerships like this one. Working with G42 also increases Microsoft’s presence in a part of the world that’s often overlooked by big tech companies, and gaining a board seat should ensure that Microsoft remains an influential player in G42’s future.
Investors should expect Microsoft to continue to flex its muscles in AI, leveraging its massive profits into new partnerships and ventures to stay at the forefront of artificial intelligence. Doing so will bolster its own AI capabilities and should increase adoption of its core products like Azure, Office, and others.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
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