Redmond, WA and Tokyo – Hitachi (OTC:) Ltd. (TSE:6501) and Microsoft Corporation . (Nasdaq: ) announced a three-year strategic partnership, expected to be worth billions of dollars, focused on integrating Microsoft’s artificial intelligence technology into Hitachi’s Lumada solutions. The partnership aims to promote social innovation and operational efficiency, with the goal of Hitachi Lumada business achieving revenue of 2.65 trillion yen (US$18.9 billion) in fiscal 2024.
Hitachi plans to embed various Microsoft technologies into its Lumada solution, including Azure open AI service, Dynamics 365, Copilot for Microsoft 365 and GitHub Copilot. This integration aims to increase productivity and provide innovative solutions across industries such as energy and transportation.
The partnership also includes a commitment to jointly develop next-generation digital solutions and promote sustainable development, particularly in cloud services and data center operations. Hitachi has begun using generative artificial intelligence for predictive maintenance across its rail services, aiming to improve service quality and safety while reducing operating expenses.
In addition to operational advancements, Hitachi plans to train more than 50,000 “GenAI professionals” to support customer transformation using artificial intelligence, and will incorporate training provided by Microsoft into its plans. The move is expected to boost talent development and enhance digital skills within the company.
The alliance is not only about technology integration, but also about addressing wider societal challenges, such as reducing the environmental impact of data centers. Europe’s Zero Carbon Data Center initiative is part of a plan to tackle CO2 emissions associated with artificial intelligence technology.
This strategic partnership builds on previous collaborations between Hitachi and Microsoft, including efforts to develop digital solutions for manufacturing and logistics. The leaders of the two companies, Hitachi President and CEO Keiji Kojima and Microsoft Chairman and CEO Satya Nadella, both expressed their commitment to accelerating social innovation and sustainable development through this alliance.
Hitachi’s internal validation shows promising results, with its detailed system design knowledge combined with Microsoft’s AI services producing high-quality application source code 70-90% of the time. The company’s rail division has also seen success using artificial intelligence for predictive maintenance.
Investment Professional Insights
as Hitachi Manufacturing Co., Ltd. . (TSE: 6501) With this transformative partnership with Microsoft Corporation (NASDAQ: MSFT), investors will likely be keen to learn more about the company’s financials and market position. With a market capitalization of US$98.4 billion, Hitachi is an important player in the technology sector. The company’s focus on integrating artificial intelligence technology into its solutions can further enhance its competitive advantage.
InvestingPro data shows that the price-to-earnings ratio is 26.1, indicating that investors are willing to pay a premium for Hitachi’s earnings, possibly in anticipation of growth from synergies between Hitachi and Microsoft’s artificial intelligence technology. Furthermore, the company’s revenue for the trailing 12 months ended at Q4 2024 was $64.28 billion, although revenue growth declined by -10.59%. This shows that despite Hitachi’s challenges in growing revenue, it remains a respectable revenue-generating company.
Additionally, Hitachi’s recent price performance has shown strong returns, with an impressive 1-year total price return of 79.33%. This positive momentum reflects investor confidence and may be attributed to strategic moves such as its partnership with Microsoft. Investors wishing to delve deeper into Hitachi’s financial health and future prospects can benefit from a series of InvestingPro Tips available on the platform. For those interested, there are other tips to explore, available through exclusive offers: use the coupon code PRONEWS24 An additional 10% discount is available for annual or bi-annual Pro and Pro+ subscriptions.
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