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Microsoft (MSFT) Adds Deep Learning AI Tools with Lobe Buyout

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Microsoft (MSFT - Free Report) recently acquired Lobe, a startup based in San Francisco, CA. However, the terms of the deal have been kept under wraps. Notably, this buyout adds to Microsoft’s growing number of AI-based acquisitions.

Lobe leverages AI to offer a visual drag-and-drop interface which allows users to develop deep learning (DL) tools. The interface is enabled to predict outcomes based on data inputs from microphones, cameras, among other mechanisms. Lobe will continue to function as a standalone entity under Microsoft’s umbrella.

Microsoft sees a lot of potential in Lobe’s simple drag-and-drop platform, which is currently in beta. In the words of Kevin Scott, company’s executive vice president and chief technology officer, “Lobe’s simple visual interface empowers anyone to develop and apply deep learning and AI models quickly, without writing code.”

Focus on Making AI Easy & Available For Use: Key Catalyst

In a bid to integrate AI into its services, Microsoft is leaving no stone unturned to add innovative DL and machine learning (ML) tools. With the Lobe buyout, the company intends to explore ways to upscale the utilization of AI and make its use easier for people.

Microsoft already boasts of a comprehensive compilation of AI tools in its Cognitive Services offering eployed on Azure cloud platform. It comprises intelligent APIs to ensure developers can easily utilize advanced technologies in their applications.

Further, Microsoft will utilize DL and ML capabilities of Lobe to power its Azure AI platform. We may note that Lobe’s drag-and-drop platform complements Azure Machine Learning Studio’s similar tools.

We believe Microsoft is on the right track, given its increasing inclination toward AI. The company’s focus on strengthening presence in the AI market is evident from its acquisitions of Bonsai, Semantic Machines, Maluuba, SwiftKet, to mention a few. These AI-based startups widen the scale of prospects for the tech giant.

The buyout is expected to strengthen Microsoft’s commitment to cloud-computing future as it aims to compete against the likes of Amazon (AMZN - Free Report) and other peers.

What the Investors Need To Know?

Shares of Microsoft have returned 34.2% year to date, substantially outperforming the industry’s rally of 29.4%. This outperformance can primarily be attributed to its rapidly expanding efforts in AI and Internet of Things (“IoT”) based developments. Undisturbed focus on Azure remains a key catalyst.




Per a report by MarketsandMarkets, the AI market is expected to hit $190.61 billion by 2025 at a CAGR of approximately36.6% from $16.06 billion valued in 2017. Lobe’s addition to Microsoft’s AI portfolio is in sync with the company’s intention to capitalize on the immense potential of AI.

To Conclude

Microsoft is putting its best foot forward to gain a competitive edge in the AI market at different levels, from strengthening automated systems to virtual assistants by adding small players with promising ML & DL capabilities.

Zacks Rank & Other Key Picks

Microsoft sports a Zacks Rank #1 (Strong Buy).

Some other top-ranked stocks in the same industry are Salesforce.com (CRM - Free Report) and Aspen Technology (AZPN - Free Report) , both flaunting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The projected long-term earnings growth rate for Salesforce and AspenTech are 25% and 16.5%, respectively.

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