Microsoft Corporation (MSFT) launched the highly popular DeepSeek R1, a powerful AI model, on its Azure cloud platform GitHub for developers. The company announced that the AI model will be featured in the model catalog on the platforms, joining over 1,800 models offered by Microsoft. Meanwhile, Microsoft released its second-quarter results for FY25, revealing slow growth in its Azure cloud computing division.
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Microsoft’s revenue from Azure and other cloud services grew just 31% year-over-year in the quarter ending December, 31, marking a decline from the 33% growth in the previous quarter. It also fell below the analysts’ expectations of cloud growth of 31.9%.
Microsoft Brings DeepSeek AI to Azure
This move comes as Microsoft seeks to lessen its reliance on OpenAI models. Reuters earlier reported that Microsoft has been focusing on integrating both internal and third-party AI models to enhance its flagship AI product, Microsoft 365 Copilot.
Additionally, Microsoft announced that customers will soon have the ability to run the R1 model locally on their Copilot+ PCs. This move aims to address potential privacy and data-sharing concerns related to the use of the model.
DeepSeek Challenges Big AI Players
The newly launched DeepSeek R1 model has gained solid attention for its high performance and low cost. It is quickly emerging as a serious competitor to some of the most advanced AI language models available.
Last week, DeepSeek launched a free AI assistant, boasting lower data usage and significantly lower costs compared to existing services. By Monday, the assistant had outpaced its U.S. competitor OpenAI’s ChatGPT in downloads on the Apple (AAPL) App Store.
On the other hand, the Financial Times reported that OpenAI has found evidence suggesting Chinese startup DeepSeek used its proprietary AI models to train a competing system.
Is Microsoft a Buy, Sell, or Hold?
MSFT stock has a consensus Strong Buy rating among 30 Wall Street analysts. That rating is based on 27 Buy and three Hold recommendations issued in the last three months. The average price target on MSFT stock of $512.77 implies 15.92% upside from current levels.
