Microsoft (MSFT) unveiled two new infrastructure chips designed to speed up artificial intelligence (AI) operations and bolster data security at its data centers at the Ignite conference on Tuesday. These custom-designed chips indicate Microsoft’s growing commitment to developing in-house chips that cater to its specific needs.
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Details of MSFT’s Customized Chips
MSFT provided more details about these customized chips. The first chip, Azure Integrated HSM, will be installed in every new data center server starting next year and will contain sensitive encryption and security data within a secure module.
Furthermore, its second innovation, a data processing unit (DPU), is designed to consolidate several server components into a single chip optimized for cloud storage tasks. Microsoft also stated that this DPU will deliver four times the performance while consuming three times less power than its existing hardware.
In addition, Microsoft introduced an upgraded liquid cooling system for its data center servers. This system is engineered to dissipate heat more effectively, making it well-suited for the energy-intensive demands of large-scale AI systems.
Why Is MSFT Developing Custom Chips?
The tech giant is developing these AI chips similar to its competitors like Amazon (AMZN) and Google (GOOGL), as it will have the advantage of improved performance and cost efficiency when using customized chips. This strategy will reduce the company’s dependency on processors from third-party manufacturers like Intel (INTC) and Nvidia (NVDA).
What Is the MSFT 12-month Target Price?
Analysts remain bullish about MSFT stock, with a Strong Buy consensus rating based on 26 Buys and three Holds. Over the past year, MSFT has increased by more than 10%, and the average MSFT price target of $495.33 implies an upside potential of 19.1% from current levels.
