The government needs to work faster to regulate AI, which has more potential for the good of humanity than any other invention preceding it, Brad Smith, Microsoft
(MSFT) president and vice chair, said on CBS’ “Face the Nation” Sunday.
Its uses are almost “ubiquitous” Smith said, “in medicine and drug discovery and diagnosing diseases, in scrambling the resources of, say, the Red Cross or others in a disaster to find those who are most vulnerable where buildings have collapsed,” the executive added.
Smith also said AI isn’t as “mysterious” as many think, adding it is getting more powerful.
“If you have a Roomba at home, it finds its way around your kitchen using artificial intelligence to learn what to bump into and how to get around it,” Smith said.
Regarding concerns about AI’s power, Smith said any technology that exists today looked dangerous to people who lived before it.
Smith said that there should be a safety break in place.
Job disruptions due to AI will unfold over years, not months, Smith said.
“For most of us, the way we work will change,” Smith said. “This will be a new skill set we’ll need to, frankly, develop and acquire.”
To prevent instances like the fake photo of the explosion near the Pentagon, Smith said there needs to be a watermark system, or “use the power of AI to detect when that happens.”
“You embed what we call metadata, it’s part of the file, if it’s removed, we’re able to detect it. If there’s an altered version, we in effect, create a hash. Think of it like the fingerprint of something, and then we can look for that fingerprint across the internet,” Smith said, adding a new path should be found to find a balance between regulating deepfakes and misleading ads and free expression.
With a US presidential election year approaching and the ongoing threat of foreign cyber influence operations, Smith said the tech sector needs to come together with governments in an international initiative.
Smith supports a new government agency to regulate AI systems.
“Something that would ensure not only that these models are developed safely, but they’re deployed in say, large data centers, where they can be protected from cybersecurity, physical security and national security threats,” Smith said.
Smith did not believe a six-month pause on AI systems that are more powerful than GPT4 is “the answer,” as Elon Musk and Apple co-founder Steve Wozniak have said.
“Rather than slow down the pace of technology, which I think is extraordinarily difficult, I don’t think China’s going to jump on that bandwagon,” Smith said. “Let’s use six months to go faster.”
Smith suggested an executive order where the government itself says it will only buy AI services from companies that are implementing AI safety protocols.
“The world is moving forward,” Smith said. “Let’s make sure that the United States at least keeps pace with the rest of the world.”
Microsoft‘s(MSFT 2.14%) stock has performed well this year, rising 34.55% compared to the S&P 500‘s 9.2% increase. However, some believe the stock is overvalued and has little room for further growth. They point to the company’s consensus analyst price target of $323.28, which suggests little upside potential over the next year.
Here’s why you should disregard analysts’ price targets and focus on two long-term growth drivers instead.
Invest for the long term
An analyst consensus price target is the average price prediction of all analysts covering a particular stock. It is typically a 12-month forecast that encourages short-term investing. However, there are several reasons why short-term investing can be detrimental to many investors, with the most significant being it is more risky than long-term investing.
Stock prices can fluctuate significantly in a brief period, meaning short-term investors are more likely to lose money than long-term investors. Additionally, short-term investors are more likely to make emotional decisions and be affected by market fluctuations. As a result, they may sell their investments when prices fall, even if they believe that a stock still has good long-term prospects.
Therefore, it is often best to focus on a company’s long-term considerations, and the two most significant long-term growth drivers for Microsoft are digital transformation and artificial intelligence (AI).
Digital transformation is a broad term for using electronic systems, devices, and cloud computing to change business operations and customer experiences. It can involve adopting new technologies, re-engineering business processes, and creating new products and services.
Microsoft derives much of its market value from being one of the largest digital transformation infrastructure companies. It offers popular digital transformation tools like:
Microsoft Azure: A cloud computing platform that provides businesses with scalable, cost-effective, and secure IT resources
Microsoft Dynamics 365: A business application suite that helps businesses improve customer service, increase sales, and reduce costs
Microsoft Power Platform: Helps businesses build apps, automate tasks, and analyze data
Microsoft Teams: A collaboration platform for businesses
Microsoft maintains a significant advantage over its competitors due to its decades-old customer relationships with many companies through its Windows Server product line and other traditional software like Office. So when many of its old clients are ready to transform digitally, they often choose Microsoft because they trust the company’s products and services, making it easier to transition. Additionally, it has a solid history of innovation, which gives its customers confidence that they are investing in a reliable partner.
The digital transformation market is massive and rapidly growing. Statista has forecast this market to grow at a compound annual growth rate (CAGR) of 16.32% from $2.16 trillion in 2023 to $3.4 trillion by 2026. So you can expect digital transformation to drive a huge chunk of this company’s growth for the foreseeable future.
In Microsoft’s fiscal third-quarter 2023 earnings report, CEO Satya Nadella highlighted artificial intelligence (AI) as an area where the company wants to be a leader. One reason why Nadella focused on AI is that it can be a significant factor in the growth of cloud computing. Modern AI technology requires enormous computing resources, which cloud computing provides on demand. It also needs to access large amounts of data, which cloud computing can store. Cloud computing also makes sharing AI models and data with others simple, an essential quality for collaboration and innovation.
Nadella hinted at AI driving cloud growth when he said the following on the company’s latest earnings call:
Azure took share as customers continue to choose our ubiquitous computing fabric from cloud to edge, especially as every application becomes AI-powered. We have the most powerful AI infrastructure and it’s being used by our partner OpenAI as well as Nvidia and leading AI start-ups like Adept and Inflection to train large models. Our Azure OpenAI service brings together our advanced models including ChatGBT and GPT-4 with the enterprise capabilities of Azure.
Many technology experts predict the AI market will increase rapidly over the next decade. For example, Next Move Strategy Consulting valued the AI market at $142.32 billion in 2022, and it projects the market to grow to approximately $1.8 trillion by 2030, a 37.8% CAGR over eight years. So expect AI to be a massive growth driver for Microsoft as the technology proliferates.
IDC predicts that cloud software revenue will grow by 19% in 2023, down from 25% in 2022. This slowdown is primarily due to global economic uncertainty, causing businesses to be more cautious about investing in new technologies. During the third-quarter 2023 earnings call, CFO Amy Hood admitted that Azure customers “continued to exercise some caution.”
You can see the impact of the terrible economic environment on the company’s cloud, digital transformation, and AI-related businesses in the chart below.
Despite the slowdown, industry experts expect the cloud software market to grow significantly in the coming years due to the continued demand for cloud-based solutions from businesses of all sizes.
Why you should put it on your buy list
Microsoft is on the cutting edge of two significant business trends in the early innings. So if you are an investor searching for a reliable company with the potential for substantial long-term gains, there are few better choices than Microsoft.
Microsoft is discontinuing most of its ergonomic keyboards, the first of which debuted almost 30 years ago.
The news has caused sadness for devotees.
“It was actually pleasant to use,” said Jeff Atwood, a co-founder of the programming question-and-answer site Stack Overflow, referring to the original Microsoft Natural Keyboard from 1994.
Brittany Matter’s home desk features the mouse, keyboard and number pad that come in the Microsoft Sculpt Ergonomic Desktop set, which has been discontinued. She sticks the keyboard in a backpack when she travels, because she likes to be comfortable when she works.
When Microsoft CEO Satya Nadella said in a memo in January that there would be “changes to our hardware portfolio,” the news had troubling significance for people like Brittany Matter.
A freelance writer in Olympia, Washington, Matter is a devotee of Microsoft’s ergonomic keyboard, the first variation of which the company started selling almost 30 years ago. She even brought along her keyboard and mouse when she traveled to Hawaii for a few days earlier this month.
Nadella’s pronouncement meant the end for her beloved accessory.
“Have you ever experienced fainting symptoms?” Matter said in an interview. “It’s this pain that crawls up the back of your neck. It prevents you from moving your neck left and right, and then your mobility is completely diminished. That’s the pain that I’ve experienced when my mouse and keyboard are not ergonomic.”
Keyboards have never been a huge business for Microsoft, which became a household name due to its ubiquitous PC software and then made a massive entrance into gaming with the Xbox. Now, much of Microsoft’s business comes from use of its cloud services by businesses, schools and government agencies.
But since entering the keyboard business in 1994 — four years earlier than current market leader Logitech — Microsoft has attracted legions of fans to its ergonomic offerings. While the company will continue producing keyboards, it’s sunsetting the more well-known ergonomic products as part of a broader effort to prioritize growing categories.
Beige in color, the Microsoft Natural Keyboard split the letter keys into two clusters so that the typist’s left hand would be slightly slanted right, and vice versa. It featured Windows keys on either side of the space bar.
“It was actually pleasant to use,” said Jeff Atwood, a co-founder of the programming question-and-answer site Stack Overflow. “It looked cool. You could see they were trying to do something. It wasn’t just aesthetics. It had a purpose.”
Matter discovered ergonomic keyboards roughly a decade ago, when she worked for Zulily. The e-commerce company gave her an ergonomic keyboard and mouse, which reduced her wrist pain.
After that, she went the Apple route and used the built-in keyboard on her laptop. Then, four years ago, she found herself in a freelance role with Marvel, which wasn’t giving her equipment.
“I needed something that was $100 or less,” Matter said.
Wirecutter, the New York Times’ product-review website, recommended a keyboard from Microsoft. She went to Best Buy and bought the Sculpt Ergonomic Desktop, containing a mouse, a keyboard and a separate number pad that she could place beside the keyboard.
Within a year, two of the keycaps popped off.
“I kept putting them on and kind of dealing with it,” she said. “But then I remembered, I have this warranty.”
Matter returned to Best Buy, which gave her a replacement. The new set has held up ever since. And now when she travels, Matter stows the keyboard in her Chrome Industries backpack.
“It’s kind of tall, and so it fits right in there,” she said.
Keyboard for mother and son
When the Microsoft Natural Keyboard appeared on the market, it caught the attention of Matt Steinhoff, who was working as a systems administrator at a newspaper in Florida. People in the news business had become concerned that certain keyboards could leave them with repetitive stress injuries. Microsoft’s keyboard looked strange to Steinhoff, but he bought one anyway after finding a coupon for it.
“It was a learning curve,” Steinhoff said. “I got a lot of weird looks. But once I got used to it, it just felt comfortable. Logically, it made perfect sense that the wrists were in a better position.”
Steinhoff became an evangelist for the product. He switched newspapers in 1998 and bought the newer model, the Microsoft Natural Keyboard Elite. His mother, a retired librarian in West Palm Beach, Florida, got one, too.
Lila Steinhoff, a retired bookkeeper, still uses the Microsoft Natural Keyboard Elite, released in 1998.
Still, the Natural Keyboard Elite was not a universally loved product.
The arrow keys were arranged in a diamond shape. Microsoft designed them that way because some people complained that the predecessor keyboard took up too much desk space, said Hugh McLoone, who was a senior user experience researcher at the company.
However, the updated layout made it “impossible to game or get around a spreadsheet,” Steinhoff said. “They’re just not in the right position.”
To the critics of the diamond arrow cluster, McLoone had these words: “I’m sorry. I’m sorry.”
By 2005, Steinhoff had started at a new job. He got Microsoft’s Natural Ergonomic Keyboard 4000, which had returned the arrow keys to a more traditional inverted T orientation.
McLoone had labored over the design of the 4000 model for seven years.
The new keyboard had a taller bump in the middle, and certain keys were set inward and upward so users wouldn’t have to reach their fingers as far. It wasn’t only meant to be comfortable. McLoone also cared about performance and appeal.
A study had shown that 22 out of 23 people preferred the geometry of the Natural Ergonomic Keyboard 4000 over the older Microsoft Natural Keyboard Pro. It became the best-selling aftermarket wired keyboard in the U.S., according to Circana data.
Software developer Marco Arment recommended it. Paul Graham, a co-founder of Silicon Valley startup accelerator Y Combinator, was photographed using it.
“I’m ecstatic!” Atwood wrote on his Coding Horror blog after buying one.
Steinhoff used his for 11 years. A replacement lasted another six years. In 2022, he bought a Microsoft Ergonomic Keyboard for his house in Palm Beach Gardens, Florida, and another one for when he was working at a client’s office.
From top to bottom, Matt Steinhoff’s home collection includes the Microsoft Ergonomic Keyboard he uses every day, a Microsoft Natural Ergonomic Desktop 7000 keyboard someone gave him and his old Microsoft Natural Ergonomic Keyboard 4000, which he keeps around as a backup.
None of the models have been perfect for Steinhoff, but he appreciates their affordability. And relying on them for all these years might have been a kind of preventive measure. His brother recently had surgery for carpal tunnel syndrome.
“I’ve certainly put if off by having an ergonomic keyboard,” he said.
As for his mother’s keyboard, Steinhoff”s family knows not to touch it even when they update her computer every 10 years or so.
“I really, really, really like my keyboard,” she wrote in an email to her son. “No, you can’t have it.”
Plenty of software developers at Microsoft like them too, Edie Adams, a director of ergonomics at the company, said in a 2022 interview.
“I think that’s because people are used to it,” she said.
A changing market
Atwood said he understands why Microsoft chose to step back from the market after so many years. For one, keyboards have exploded in popularity, and people post social media videos of themselves assembling them. In the 1990s, the average person who bought a PC just used the keyboard that came in the box.
On Atwood’s desk at his home in Berkeley, California, sits an iridescent keyboard someone built for him.
“The industry is mature, and they have other things they want to focus on,” said Atwood, who announced in 2013 that he had collaborated with WASD Keyboards on a stripped-down mechanical keyboard called the Code. “They really deserve a lot of credit for hardware stuff. It was unappreciated, in my opinion. They really moved things forward.”
A Microsoft spokesperson told CNBC in an email that the company is “focusing on its Windows PC accessories portfolio under the Surface brand.”
McLoone owns a Microsoft Wireless Comfort Desktop 5050, whose keyboard utilizes the curvy design he pioneered before leaving Microsoft in 2009. The keys are set up to encourage good posture, with larger keys in the middle. Microsoft’s contemporary Sculpt Comfort Desktop kit includes a keyboard that employs a similar style.
The keyboard is out of stock on Microsoft’s website, although it remains available on Amazon. One person in Japan bought 10 on Amazon after hearing the news that Microsoft would stop making the product.
What does McLoone suggest?
“I don’t know. Buy the next best thing. Stockpile them,” said McLoone, who now works as a senior manager of user experience research at T-Mobile.
Other versions of Microsoft’s older keyboards are likewise out of stock but still can be found elsewhere online for the time being.
Microsoft is still selling the Surface Ergonomic Keyboard, which came out in 2016. While it’s out of stock on the company’s website, it “remains part of our Surface-branded PC Accessories lineup,” the company spokesperson said. The model costs $129.99 on Amazon, twice the price of the discontinued Microsoft Ergonomic Keyboard.
Other companies, including Logitech, still make ergonomic keyboards. But that’s of little consolation to people like Matter.
“I am so devastated,” Matter wrote in an email. “I’ll have to buy another set as a backup before they stop selling them.”
Microsoft (MSFT – Free Report) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock’s performance in the near term.
Shares of this software maker have returned +7% over the past month versus the Zacks S&P 500 composite’s +0.6% change. The Zacks Computer – Software industry, to which Microsoft belongs, has gained 6.3% over this period. Now the key question is: Where could the stock be headed in the near term?
While media releases or rumors about a substantial change in a company’s business prospects usually make its stock ‘trending’ and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Revisions to Earnings Estimates
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company’s earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Microsoft is expected to post earnings of $2.56 per share, indicating a change of +14.8% from the year-ago quarter. The Zacks Consensus Estimate has changed +4.9% over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $9.66 points to a change of +4.9% from the prior year. Over the last 30 days, this estimate has changed +3.7%.
For the next fiscal year, the consensus earnings estimate of $10.78 indicates a change of +11.7% from what Microsoft is expected to report a year ago. Over the past month, the estimate has changed +2.2%.
With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more conclusive indicator of a stock’s near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Microsoft.
The chart below shows the evolution of the company’s forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it’s important to know a company’s potential revenue growth.
In the case of Microsoft, the consensus sales estimate of $55.35 billion for the current quarter points to a year-over-year change of +6.7%. The $211.08 billion and $232.62 billion estimates for the current and next fiscal years indicate changes of +6.5% and +10.2%, respectively.
Last Reported Results and Surprise History
Microsoft reported revenues of $52.86 billion in the last reported quarter, representing a year-over-year change of +7.1%. EPS of $2.45 for the same period compares with $2.22 a year ago.
Compared to the Zacks Consensus Estimate of $50.93 billion, the reported revenues represent a surprise of +3.78%. The EPS surprise was +10.36%.
Over the last four quarters, Microsoft surpassed consensus EPS estimates three times. The company topped consensus revenue estimates two times over this period.
No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price rightly reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company’s valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Microsoft is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Microsoft. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
May 10 (Reuters) – Microsoft Corp (MSFT.O) will not raise salaries for full-time employees this year and is reducing budget for bonuses and stock awards, Insider reported on Wednesday, citing an internal email by CEO Satya Nadella.
The tech giant did not immediately respond to a Reuters request for comment.
“Last year, we made a significant investment in compensation driven by market conditions and company performance, nearly doubling our global merit budget…this year the economic conditions are very different across many dimensions” the report quoted Nadella saying.
In January, Microsoft said it would let go of 10,000 workers, adding to the tens of thousands layoffs announced before that across the technology sector as it deals with slowing growth in a turbulent economy.
Microsoft has now squarely placed its focus on generative AI, an area the industry sees as a bright spot.
In collaboration with ChatGPT maker OpenAI, which also has received billions of dollars in funding from Microsoft, the tech giant has been infusing the AI tech into its Office products as well as search engine Bing.
Reporting by Chavi Mehta in Bengaluru; Editing by Arun Koyyur
Microsoft is rolling out the new AI-powered version of its Bing search engine to anyone who wants to use it.
Nearly three months after the company debuted a limited preview version of its new Bing, powered by the viral AI chatbot ChatGPT, Microsoft is opening it up to all users without a waitlist – as long as they’re signed into the search engine via Microsoft’s Edge browser.
The move highlights Microsoft’s commitment to move forward with the product even as the AI technology behind it has sparked concernsaround inaccuracies and tone. In some cases, people who baited the new Bing were subject to some emotionally reactive and aggressive responses.
“We’re getting better at speed, we’re getting better at accuracy … but we are on a never-ending quest to make things better and better,” Yusuf Mehdi,a VP at Microsoft overseeing its AI initiatives, told CNN on Wednesday.
Bing now gets more than 100 million daily active users each day, a significant uptick in the past few months, according to Mehdi. Google, which has long dominated the market, is also adding similar AI features to its search engine.
In February, Microsoft showed off how its revamped search engine could write summaries of search results, chat with users to answer additional questions about a query and write emails or other compositions based on the results.
At a press event in New York City on Wednesday, the company shared an early look at some updates, including the ability to ask questions with pictures, access chat history so the chatbot remembers its rapport with users, and export responses to Microsoft Word. Users can also personalize the tone and style of the chatbot’s responses, selecting from a lengthier, creative reply to something that’s shorterand to the point.
The wave of attention in recent monthsaround ChatGPT, developed by OpenAI with financial backing fromMicrosoft, helped renew an arms race among tech companies to deploy similar AI tools in their products. OpenAI, Microsoft and Google are at the forefront of this trend, but IBM, Amazon, Baidu and Tencent are working on similar technologies. A long list of startups are also developing AI writing assistants and image generators.
Beyond adding AI features to search, Microsoft has said it plans to bring ChatGPT technology to its core productivity tools, including Word, Excel and Outlook, with the potential to change the way we work. The decision to add generative AI features to Bing could be particularly risky, however, given how much people rely on search engines for accurate and reliable information.
Microsoft’s moves also come amid heightened scrutiny on the rapid pace of advancement in AI technology.In March, some of the biggest names in tech, including Elon Musk and Apple co-founder Steve Wozniak, called for artificial intelligence labs to stop the training of the most powerful AI systems for at least six months, citing “profound risks to society and humanity.”
Mehdi said he doesn’t believe the AI industry is moving too fast and suggested the calls for a pause aren’t particularly helpful.
“Some people think we should pause development for six months but I’m not sure that fixes anything or improves or moves things along,” he said. “But I understand where it’s coming from concern wise.”
He added: “The only way to really build this technology well is to do it out in the open in the public so we can have conversations about it.”
Microsoft is extending the Startup Founders Hub, its self-service platform that provides founders with free resources including Azure credits, with a new incubator program called the Pegasus Program.
Pegasus will select startups with products that “fill a market need” and give them up to $350,000 in Azure, GitHub and LinkedIn credits plus backing from advisors, as well as “access to the best Microsoft tech,” according to Hans Yang, general manager at Microsoft for Startups.
“Given the current economic climate, today’s launch of Microsoft for Startups Pegasus Program couldn’t be timelier,” Yang, speaking to TechCrunch via email, said. “In a capital-constrained environment, startups need to demonstrate traction and revenue growth. Startups selling to enterprise companies are challenged with long sales cycles, complex regulatory requirements, and high demands for scalability and reliability. At the same time, enterprise companies know that disruption is coming, but want to work with startups who can meet their rigorous requirements.”
Pegasus is a two-year program, open to startups already active in Microsoft’s Founders Hub and with customer-facing products built on the Microsoft Cloud. A core requirement is having early product-market fit, Yang stressed, including revenue traction, a sales team in place and a “proven” go-to-market model.
“This signals to us that they are ready to go up market to enterprise customers,” Yang added. “Our industry-focused experts, when evaluating potential Pegasus startups, also ensure their solutions are resolving current industry challenges for these sectors. This ensures we provide enterprises with relevant solutions that they can invest in to get a short-term return on investment.”
All startups chosen for Pegasus are assigned a vertical lead to generate sales opportunities and act as an advisor. They also get a success manager, who’s responsible for helping them go to market and “ensure they have the best resources for generating and developing deals.”
Lastly, Pegasus companies receive a dedicated cloud solution architect to support their technical success and facilitate “preferred” access to Azure’s AI offerings. These architects serve as a single point of contact within Pegasus, helping startups engage with Microsoft customers and handling compliance and security checks.
Yang noted that, while Pegasus inherently favors startups built with Azure tech, the program doesn’t lock companies or partners into a particular cloud. They’re able to use multiple clouds, including stalwarts such as Google Cloud and Amazon Web Services, if they so choose as long as they’re meeting their customers’ needs.
“The program is really driven by the needs of enterprise customers, and while many of our customers enjoy the synergies of leveraging multiple Microsoft solutions together, we are focused on their needs,” Yang said.
Microsoft’s Founders Hub platform, through which the Pegasus program is facilitated and orchestrated.
There’s no limit to the number of startups that can join Pegasus, but Yang says that special attention will be paid to those in industries like healthcare, AI, retail and cybersecurity. He expressed outsize enthusiasm for generative AI, a particularly hot market at the moment.
“As the AI era takes shape, enterprise companies are looking for ways to embrace generative AI, which presents a tremendous opportunity for startups who can help them on that journey,” Yang said. “Broadly, we believe that every startup, regardless of the industry they serve, should be exploring how they incorporate generative AI into their product roadmap.”
In private preview, Microsoft claims that Pegasus has already supported over 100 startups whose average deal size exceeded $300,000. In total, it’s pledged over $35 million to those startups in tech credits.
“We’ve been piloting the Pegasus program to refine the matchmaking process, working with business-to-business startups on a daily basis … to identify enterprise customers with a specific need for innovative solutions and connect them with the startups that can address that need,” Yang said. “We help get their products and go-to-market plans enterprise-ready, then take them to market alongside our sales team and directly to enterprise buyers. The results have been promising, with Pegasus startups seeing an average deal size of $350,000 and an active pipeline of over 1,300 opportunities.”
Pegasus complements Microsoft’s various ongoing early-and late-stage startup efforts, including partnerships with VCs and accelerators to back 10,000 companies in Africa over the next five years. The tech giant also maintains the ISV Success Program, a program designed to help early-stage software vendors build and publish apps.