Microsoft is the real winner of the OpenAI chaos that reigned over the weekend, and its stock price rally is indicative of that. Following the shocking news that OpenAI’s board of directors had unexpectedly fired CEO Sam Altman on Friday, reportedly due to internal conflicts over OpenAI’s direction, Microsoft shares fell more than 2 percent in after-hours trading, wiping out potentially tens of millions in market value. But after Microsoft CEO Satya Nadella announced early Monday morning that the company had hired Altman and OpenAI co-founder Greg Brockman, who also left in protest of Altman’s firing, shares of Microsoft are rising once again.
Wall Street investors, like many in the tech industry, appear to be betting on OpenAI’s co-founders and team, rather than solely on the future of Microsoft’s relationship with the AI startup in which it has invested more than $13,000. millions of dollars as a means to compete. with other tech giants, such as Google and Meta, in AI offerings.
When news of Altman’s departure broke over the weekend, Microsoft’s stock price fell, a clear example of how closely the fates of the two companies had become intertwined. At the end of the day, Microsoft was down 1.68% at $369.85. The decline continued over the weekend, even as it emerged that OpenAI was attempting to reinstate Altman. But after Nadella announced that Microsoft would hire Altman and Brockman, “setting a pace for new innovation,” Microsoft stock once again began to rise Monday morning, recovering from most of its previous decline.
In early morning trading, Microsoft shares rose more than 2%, recouping much of the losses from the OpenAI saga. It also hit an all-time high of $377.10 at one point, Forbes noted.
Analysts believe Microsoft is now on the right track, as it has not only attracted OpenAI leadership (and likely more team members over time as they defect to join the former OpenAI co-founders in their new home), It has also maintained its relationship with OpenAI for the use of its technology in the short term. Brockman has already Announced OpenAI defectors including Jakub Pachocki, Szymon Sidor and Aleksander Madry will join Microsoft to help lead the new AI team.
Rosenblatt’s Barton Crocket wrote to clients that the hires “clearly offer some temporary stability” for Microsoft, Forbes noted, while Wedbush’s Dan Ives said the move puts Microsoft in “an even stronger position” for AI.
According to another research note from Macquarie analyst Fred Havermeyer, as reported by the Financial Times, Microsoft may have “staged a coup” of its own:
We think (Microsoft CEO) Satya Nadella may have pulled his own punch. If many OpenAI employees decide to migrate to Microsoft to join Altman and Brockman, then Microsoft would not only have a license to OpenAI’s intellectual property up to AGI, but it would also be effectively acquiring OpenAI’s core differentiator: its ambitious and experienced technical team. . talent.
We believe this team is well positioned to begin working with experienced leaders who would likely be equipped with the familiar infrastructure of Microsoft Azure (OpenAI’s exclusive cloud provider) and Microsoft’s strong balance sheet. We believe Microsoft has preserved its AI product roadmap and created formidable competition for generative AI startups and Google DeepMind. We can imagine a future where Altman’s team can specialize not only in developing AI models, but also in vertically optimizing AI models, from silicon to software, and creating new category-defining applications.
Microsoft has been trading between $371 and $377.10 today, up from its previous close of $369.85. If it maintains its gains, Insider reports that its market cap will grow by $50 billion to $2.8 billion by the end of the day.
