Market Analysis

2025 to Mark Major AI Shifts, Says Microsoft

Amos Simanungkalit · 06 Dec 202416.3K Views

As we approach 2025, Silicon Valley's focus on artificial intelligence (AI) shows no signs of slowing down. The trend that dominated 2024 will continue to shape the year ahead, with some new developments emerging.

In 2025, companies will launch more advanced AI models and AI agents will gain greater prominence. The industry will also focus on making AI accessible to more consumers while improving the energy efficiency of AI data centers. Ashley Llorens, corporate vice president and managing director at Microsoft Research, explained that AI models will soon be capable of handling more complex tasks, enabling AI to reason better and perceive environments more deeply.

This evolution paves the way for AI agents—autonomous or semi-autonomous applications that can perform specific tasks. Unlike traditional chatbots like ChatGPT, these agents will be controlled using natural language and can handle tasks like sorting customer inquiries or extracting data from invoices for spreadsheet organization.

Microsoft is already using AI agents internally to improve employee connectivity. For instance, its "coffee connections" feature assigns an AI system to arrange weekly coffee chats by suggesting interesting conversations and topics within the organization.

AI will also become increasingly multimodal in 2025, allowing it to process and interact with text, visuals, and audio. For example, Microsoft's Copilot Vision will let users ask questions about web pages using text or voice, without specifying the subject, such as asking about actors in a movie by simply pointing to a movie poster.

In addition to enhanced functionality, AI will become more energy efficient through hardware upgrades. Microsoft is working toward data centers that require no water for cooling and aim to use low-carbon materials like steel and concrete alternatives. Similarly, Amazon is focusing on making its data centers more energy-efficient to provide greater computing power for the same energy consumption.

Both Microsoft and Amazon have made significant investments in AI, with Microsoft supporting OpenAI, Amazon investing in Anthropic, and Google building its Gemini AI product line. Meta is also expanding its AI capabilities to boost ad sales and customer retention. Wall Street is keen to see if these investments result in higher revenues and stock prices.

Despite being an early leader in generative AI, Microsoft’s shares have risen by only 14% this year, compared to 22% for Google and 39% for Amazon. The broader S&P 500 has gained 26% in the same period.