The OpenAI stir over the weekend truly belonged to Microsoft, and the company’s rising stock price reflects this. Microsoft stock fell more than 2 percent in after-hours trading on Friday following the announcement that OpenAI’s board had abruptly ousted CEO Sam Altman, allegedly due to internal conflict over OpenAI’s future.
This could have resulted in the loss of tens of millions of dollars in market value. However, Microsoft stock is again rising as CEO Satya Nadella said early Monday morning that the business has hired Altman and co-founder of OpenAI Greg Brockman, who also departed in protest at Altman’s firing.
To compete with other tech giants like Google and Meta on AI offerings, Wall Street investors, like many others in the industry, appear to be hedging their bets more on the co-founders and team of OpenAI than on the future of Microsoft’s relationship with the AI startup in which it has invested over $13 billion.
Microsoft’s stock price dropped over the weekend as word spread of Altman’s resignation, demonstrating just how tightly the two businesses’ futures had become entwined. Microsoft finished the day down 1.68% to $369.85. Over the weekend, the drop persisted despite reports that OpenAI was attempting to get Altman back. However, Microsoft’s stock rebounded Monday morning after Nadella declared that the company would recruit Altman and Brockman, “setting a pace for new innovation,” reversing most of its earlier loss.
Microsoft’s shares gained more than 2% in early morning trading, recovering many losses from the OpenAI scandal. According to Forbes, It reached an all-time high of $377.10.
Analysts think Microsoft is finally on the right track because it has not only hired OpenAI’s leadership (and probably more of the team eventually as they leave to work with the former co-founders of OpenAI at their new location), but it has also kept its relationship with OpenAI intact for the immediate use of its technology. OpenAI defectors Jakub Pachocki, Szymon Sidor, and Aleksander Madry will join Microsoft to lead the new AI team, according to an announcement made by Brockman.
Forbes said that Barton Crocket of Rosenblatt wrote to clients that Microsoft’s hirings “clearly offer some transitional stability,” Dan Ives of Wedbush stated that Microsoft is now in “even a stronger position” for AI due to this move.
The Financial Times reported on another research note from Macquarie analyst Fred Havermeyer suggesting that Microsoft might have “pulled off a coup” of its own:
We believe that Satya Nadella, the CEO of Microsoft, may have just pulled off his coup. Microsoft would not only own a license to OpenAI’s intellectual property up to AGI if many of its workers decide to join Mr. Altman and Mr. Brockman at Microsoft, but it would also own the company’s primary point of differentiation—its driven and skilled technical staff.
With seasoned leaders who probably have familiarity with Microsoft Azure infrastructure—OpenAI’s exclusive cloud provider—and Microsoft’s strong balance sheet, we believe this team is well-positioned to get started right now. We think Microsoft has managed to maintain its AI product plan while also putting together strong rivals for Google DeepMind and generative AI companies. In the future, Mr. Altman’s group may focus on creating new, category-defining applications and vertically optimizing AI models from silicon to software.
From its prior close of $369.85, Microsoft has been trading between $371 and $377.10 today. According to Insider, if it hangs onto its gains, its market value will increase by $50 billion by the end of the day to reach $2.8 billion.
