Microsoft Emerges as the Biggest Winner in the OpenAI Storm, Stock Price May Hit Record Highs

2023-11-21

Microsoft (MSFT.O) has emerged as the biggest winner in the turmoil at OpenAI, hiring the ousted CEO Sam Altman and other key employees from the startup to prevent them from going to competitors and help deepen its leading position in the AI race. Since last Friday, concerns about Microsoft have been raised due to the turmoil at OpenAI, as the company has invested billions of dollars and relied heavily on the pioneer's technology to provide most of its AI products. Analysts say this move ensures that the "golden boy and girl of AI" will stay at Microsoft, as the company competes with Alphabet's Google (GOOGL.O) to dominate this emerging industry. Microsoft's stock price has risen by about 1.5%, which would increase the company's market value by nearly $30 billion. This is almost equal to OpenAI's valuation in its last funding round. "If Microsoft lost Altman, he might have gone to Amazon, Google, Apple, or some other tech companies," said Dan Ives, an analyst at Wedbush Securities. "On the contrary, he is now safely at Microsoft's headquarters. With Altman and Brockman in charge of AI at Microsoft, we believe that Microsoft is now in a stronger position." Altman's unexpected dismissal from OpenAI shocked the tech industry, but he will lead a new research team at the software giant, working with Greg Brockman, another co-founder of OpenAI, and other researchers, including Szymon Sidor. Analysts also say that more employees may jump ship to Microsoft, as the turmoil may affect the expected stock sale of the startup, which is valued at $86 billion, potentially impacting the earnings of OpenAI employees. "OpenAI's for-profit subsidiary is about to have a secondary market transaction with a valuation of over $80 billion. These 'profit participation units' would bring a value of over $10 million to key employees. But now, none of this will happen," said SemiAnalysis, a chip industry news briefing. On Monday, some employees of the startup, including former interim CEO Mira Murati, posted on the X social media platform, saying, "Without employees, OpenAI is nothing." At Microsoft, Altman's team may also have more computing power, as the company is the second-largest cloud computing player in the United States and has committed to spending billions of dollars to expand the capacity of its data centers. "If this team went the startup route, they would have to spend a lot of time rebuilding GPT-4. Instead, at Microsoft, they will have access to most of the intellectual property they need for their future products," said SemiAnalysis.