Despite being the world's second-largest company with a whopping $2.3 trillion valuation, Microsoft (MSFT 1.65%) has found itself at the center of the start-up universe in 2023 thanks to its focus on artificial intelligence (AI).

Back in January, the company made a sizable bet on the widely recognized leader in generative AI, OpenAI. It's the developer of online chatbot ChatGPT which Microsoft is currently integrating across its product portfolio. 

But Microsoft just made another bet in the AI space, this time targeting entrepreneurs and small businesses, with an investment in no-code software development company Builder.ai. The size of the deal was undisclosed, but here's what it means for Microsoft stock and its investors.

Apps for everyone!

There was a time when successful small businesses paid thousands of dollars to have a professional developer create a website for them. But e-commerce giant Shopify (SHOP 4.90%) crashed that party, because almost anybody can build a website with its no-code platform, and it's incredibly cheap. 

Well, think of Builder.ai as the Shopify of the application world. Whether it's a web, mobile, or desktop app, the platform uses AI to deliver a no-code development experience for practically anybody -- no programming knowledge required. It enables any small business to build and own a piece of software, whether it's a billing tool, order management system, or even a platform that can take bookings. 

Builder.ai's process is simple. Businesses first speak to an expert to map out the app idea, and then AI handles the development with an AI-powered assistant called Natasha serving as the project manager. Natasha can recommend features the app needs, and can even create a prototype!

Microsoft will first launch Builder.ai on Teams, its video and collaboration platform used by 300 million people worldwide. Teams has a store where developers can deploy apps to improve the user experience, so having an AI assistant like Natasha on board can help more users create the add-ons they want. 

But Builder.ai will also form part of Microsoft's growing cloud AI ecosystem on Azure, which already features OpenAI and the latest GPT-4 technology which businesses can use to train their own large language models. 

Azure places AI at the fingertips of businesses worldwide

Azure already offers hundreds of different products and solutions to its business customers, many of which are focused around application development. But it's now placing a heavy focus on automation powered by artificial intelligence, so Builder.ai is the perfect tool. 

OpenAI is already deeply integrated into Azure, allowing businesses to tap into advanced generative AI. GPT-4 is capable of coding websites from scratch, programming complex games, and analyzing drug compounds, among a long list of other things. In the recent fiscal 2023 third quarter (ended March 31), Microsoft said 2,500 companies were already using OpenAI on Azure, which was a 1,000% increase in just three months. 

Those are mostly large enterprise customers, though, but it's possible a tool like Builder.ai will serve as an onramp to Azure for small businesses. 

Azure is currently the fastest growing piece of Microsoft's entire organization. The cloud platform generated $67.3 billion in revenue in fiscal 2022 (ended June 30) and it's on track to beat that in fiscal 2023. But a Wall Street analyst at Bernstein predicts AI could double Azure's annual revenue, driving it to No.1 spot in the cloud industry ahead of its rival Amazon (AMZN 1.30%) Web Services. 

AI is at the center of Microsoft's future

Microsoft has always pursued innovation, so investors shouldn't be surprised it's aggressively going after AI start-ups. The opportunities this new technology will create could be unlike anything the technology sector has seen before, and it's already revolutionizing the most "boring" parts of Microsoft's business.

Take the Bing search engine, for example. It holds roughly 2.8% global market share in the internet search industry, but thanks to an integration with ChatGPT, it feels it can chip away at Google's dominant 92.6% share. In Q3, Microsoft told investors Bing had amassed 100 million daily active users, with installs of its mobile application quadrupling in just two months. It said its market share in the U.S. is already ticking higher. 

The search industry generates an estimated $200 billion per year in advertising dollars, so it's an enormous opportunity for Microsoft which has come seemingly out of nowhere. 

With companies like OpenAI and Builder.ai in its portfolio, Microsoft might be the best company to invest in for exposure to artificial intelligence.