Microsoft, under AI chief Mustafa Suleyman, is developing a new AI language model called MAI-1 with about 500 billion parameters.

MAI-1 is designed to be a midrange AI option, bridging the gap between GPT-3 and ChatGPT-4, possibly utilizing Inflection AI Inc.'s data.

Due to its complexity, MAI-1 will be operated in Microsoft's data centers, enhancing services like Bing and Azure.

Microsoft is expected to present a preview of MAI-1 at their Build developer conference.

The company has recently open-sourced Pi-3 Mini, a language model with 3.8 billion parameters, and is focusing on providing free, deep content through partnerships.

Microsoft's stock has risen over 33% in the past year, indicating market approval of its AI strategy and in-house development efforts.