Microsoft's Digital Ad Business Could Take Off with ChatGPT
Microsoft is set to use its artificial intelligence (AI) capabilities to boost its digital ad business, with ChatGPT integration into its search engine. The company has already integrated ChatGPT into Bing, its web search engine, to experiment with paid advertising links in chat results. This move signifies that Microsoft is investing in its effort to grow its share of the digital advertising market, competing with Alphabet, who currently lead the segment.
Kya Sainsbury-Carter, Vice President of MSFT's Ad business, told the Wall Street Journal that the company's digital ad business is at an inflection point and has witnessed many changes. With AI and continued investment in the business, MSFT could deliver more relevant ads faster, which will drive its market share.
It is worth highlighting that Microsoft has a 49% stake in OpenAI, which built the popular AI chatbot ChatGPT. During the last reported quarter, MSFT stated that despite headwinds in the ad market, Bing continued to gain share in the U.S., with daily users of its Start personalized content feed increasing over 30% YoY.
By leveraging ChatGPT, Microsoft could deliver relevant ads to users faster than its competitors. Analysts are upbeat about MSFT's prospects, with MSFT stock having received 27 Buy, four Hold, and one Sell recommendations for a Strong Buy consensus rating. These analysts' average price target of $300.28 implies an upside of 4.94%.
It's still too early to tell whether MSFT will be able to increase its market share in digital advertising thanks to ChatGPT, but its investment in AI and continued efforts to grow its digital ad business prove to be promising.
