Prosus Invests $12.5mln in Intella to Develop AI Models for Arabic.

Intella has closed a $12.5 mln funding round to build AI models for Arabic language processing. The funding was provided by Prosus N.V., a global consumer internet group and one of the largest technology investors in the world. The funds will be used to develop AI models for Arabic language processing, which will enable the company to provide more accurate and efficient services to its clients.

Microsoft has initiated a significant strategic shift by developing in-house AI models to enhance its cloud market dominance and profit margins. The company is reducing its reliance on external partners like OpenAI by integrating proprietary models such as MAI-Voice-1 and MAI-1-preview into Azure and Copilot. This move is expected to save Microsoft $500 million annually and drive substantial revenue growth and gross margin improvements.

Microsoft's FY2025 investment of $80 billion in AI datacenters underscores its commitment to long-term margin expansion. By shifting from pay-per-use third-party models to in-house solutions, Microsoft is projected to save over $500 million annually in operational costs. This shift is already reflected in Azure’s AI-driven automation, which has improved gross margins and contributed to 39% Q2 2025 revenue growth and a projected 65% gross margin by 2026.

Microsoft's AI-first ecosystem, including 100 million Copilot users and 800 million AI feature users, outpaces AWS and Google Cloud. The company’s vertical integration strategy, exemplified by models like MAI-Voice-1 and MAI-1-preview, enables tailored AI solutions for enterprise clients, reducing licensing costs and improving scalability.

Microsoft’s margin expansion is further supported by its $30 billion capital expenditure plan for FY2026, which prioritizes AI infrastructure and liquid-cooled data centers. This investment ensures the company can meet surging demand for AI workloads, with Azure AI revenue projected to exceed $50 billion annually by 2027.

However, challenges remain. Microsoft’s aggressive AI expansion has temporarily strained gross margins in the Intelligent Cloud segment. Competitors like AWS and Google are also investing heavily in AI infrastructure and models, which could pose threats to Microsoft’s dominance. Nevertheless, Microsoft’s first-mover advantage in AI integration and its substantial capex plan suggest a durable competitive edge.

In conclusion, Microsoft’s shift to in-house AI models is a catalyst for long-term margin expansion and market differentiation. By reducing licensing costs, enhancing operational efficiency, and embedding AI into its ecosystem, Microsoft is not only outpacing rivals but also redefining the economics of cloud computing.

References:
[1] https://www.ainvest.com/news/microsoft-strategic-shift-house-ai-models-impact-margins-market-position-2509/
[2] https://www.designrush.com/agency/ai-companies/trends/how-much-does-ai-cost
[3] https://www.ainvest.com/news/microsoft-ai-reliance-strategic-shift-investment-implications-2509/
[4] https://www.revolgy.com/insights/blog/q2-2025-ai-cloud-race-aws-microsoft-google-cloud
[5] https://www.microsoft.com/en-us/microsoft-cloud/blog/2025/07/24/ai-powered-success-with-1000-stories-of-customer-transformation-and-innovation/
[6] https://www.ainvest.com/news/microsoft-ai-driven-margin-expansion-cloud-dominance-buy-sustained-growth-2025-2508/
[7] https://www.ainvest.com/news/microsoft-q4-fy2025-earnings-strategic-inflection-point-ai-driven-growth-2507/
[8] https://sergeycyw.substack.com/p/microsoft-q2-2025-earnings-analysis