Microsoft Corporation: MSFT Stock Could Gain Big From This Recent Acquisition

Microsoft could gain a lot from its recent acquisition of Maluuba, potentially driving MSFT stock higher in the long term.

Microsoft (NASDAQ:MSFT) acquired Maluuba, a Montreal-based company with an Artificial Intelligence (AI) research lab where researchers have been modeling some of the innate capabilities of the human brain, from memory and common sense reasoning to curiosity and decision making. We examine how this acquisition could benefit Microsoft stock investors.

Maluuba’s overall long-term vision is to develop general artificial intelligence - all-purpose AI not limited to specific problems or narrow domains, but flexible like human intelligence - and eventually build machines that can think, reason and communicate like humans. Already at TechCrunch Disrupt 2012, Maluuba demonstrated impressive virtual assistants that could manage a wide range of domains."Most successful efforts in AI to date have focused on building good results with a narrow domain focus," notes TechCrunch, "but Maluuba’s more general focus is the golden carrot in terms of product breakthroughs for a lot of the big players in tech."

Also Read: 3 Strengths That Make Microsoft Corporation (MSFT) Stock A Buy Now

"At Microsoft, we have an approach that’s both ambitious and broad, an approach that seeks to democratize Artificial Intelligence (AI), to take it from the ivory towers and make it accessible for all," states a Microsoft manifesto titled "Democratizing AI" focused on the Redmond giant's ambition to make powerful AI computing available to anyone, anytime and at low cost in the cloud. "We’re building the world’s most powerful AI supercomputer and making it available to anyone, via the cloud, to enable all to harness its power and tackle AI challenges, large and small." Microsoft wants to develop AI-powered "ambient computing" and augment its application, on any device, at any point in time, with intelligence.

Of course, the upcoming machines that think, envisaged by Microsoft and Maluuba, will live in the Microsoft cloud and power next-generation Microsoft commercial cloud services. In fact, Microsoft's current strategy is centered around the cloud, and AI applications will play a key role in Azure, the company's cloud computing platform.

"Ultimately the cloud is about powering the next generation of applications," said Microsoft CEO Satya Nadella. "It is always the next generation applications that have driven infrastructure and when we look at this current generation of applications that people are building, the thing that is going to define these applications, that characterizes these applications, is machine learning and artificial intelligence. Therefore we are building out Azure as the first AI supercomputer."

Also Read: Is Microsoft stock a better bet than Apple stock for now?

"Maluuba’s expertise in deep learning and reinforcement learning for question-answering and decision-making systems will help us advance our strategy to democratize AI and to make it accessible and valuable to everyone - consumers, businesses and developers," said Harry Shum, Executive VP, Microsoft Artificial Intelligence and Research Group, noting that Maluuba's vision is totally in line with Microsoft's. "I want to emphasize just how excited I am about the technology and talent Maluuba brings to Microsoft and the role they’ll play in helping us bring AI to every person and organization on the planet."

Maluuba co-founders, CEO Sam Pasupalak and CTO Kaheer Suleman, stated that the company needed to scale rapidly to build on its previous research advances in machine reading comprehension, dialogue understanding, and general (human) intelligence capabilities such as memory, common-sense reasoning, and information seeking behavior. Therefore, Maluuba needed new resources that only a tech giant like Microsoft could provide, to advance towards artificial general intelligence.

"Microsoft is an excellent match for our company," said Pasupalak and Suleman. "Their ambitious vision of democratizing AI to empower every person and every organization on the planet fundamentally aligns with how we see our technology being used. Microsoft provides us the opportunity to deliver our work to the billions of consumer and enterprise users that can benefit from the advent of truly intelligent machines. In addition, Microsoft’s immense technical resources including back-end infrastructure (i.e. Microsoft’s Azure and GPU infrastructure) and engineering talent will help us accelerate our pace in conducting research and bringing solutions to market. In short, our new partnership enables us to advance more quickly toward our vision of creating literate machines."

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With Maluuba's acquisition comes a globally recognized top expert in AI. Yoshua Bengio, one of the world’s foremost experts in machine learning, head of the Montreal Institute for Learning Algorithms and an advisor to Maluuba, will also be advising Microsoft.

AI research is booming, with important research breakthroughs coming at a growing pace, but only tech giants can monetize AI research and translate it into solid commercial products and services. In particular, Microsoft, with its pervasive enterprise cloud computing platform Azure, is well positioned to take commercial advantage of AI research. Therefore, the acquisition of Maluuba is good news for Microsoft investors.

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