June 19, 2024
Microsoft adds  billion to market cap from OpenAI drama

Following the ouster of CEO Sam Altman, the future of OpenAI is in question and the end result is unclear. With most of OpenAI’s employees ready to jump ship and follow Altman to Microsoft, the startup that brought ChatGPT to the world looks like an empty shell, and insiders’ deal to cash out equity at an $86 billion valuation is effectively over.

But there is a clear winner. According to this, Microsoft has added $63 billion to its market capitalization since Friday’s close. LuckCounting of. The company’s shares reached $378 per share in afternoon trading on Monday, which is its highest level till date. If that price holds by Monday’s market close, Microsoft’s market capitalization, based on its 7.429 billion shares outstanding, will total $2.82 trillion.

This is a remarkable turn of events for Microsoft and CEO Satya Nadella, who could have easily been the biggest losers in this case. Microsoft has invested $13 billion in the startup and has made OpenAI’s technology a cornerstone of its product lineup, incorporating it into everything from Office365 to GitHub.

The statement Friday by OpenAI’s board, which fired Altman because “he was not consistently forthright in his communications,” was a direct threat to Nadella’s strategy. Indeed, within minutes of the announcement becoming public on Friday afternoon, Microsoft’s stock dropped nearly 2%, falling from $373 to $367 per share – a remarkable decline for a company with a market cap approaching $3 trillion. Represents loss.

“If Microsoft had lost Altman, it would have fallen to Amazon, Google, Apple or any of the many other tech companies yearning to be the face of AI globally,” Wedbush analyst Dan Ives wrote in a note to investors on Monday. could go.”

But Nadella’s aggressive response under pressure, announcing at midnight on Sunday that he had hired Altman and former OpenAI president Greg Brockman to lead a new AI research lab inside Microsoft, Ives said, “poker. The World Series was “the move for the ages.”

Or, as Macquarie Equity Research analysts succinctly put it in the title of their note to Microsoft investors: “When you come to the king, you better not miss.”

Microsoft will now hire two of OpenAI’s most influential employees and retain its majority stake in the startup. OpenAI, for its part, has appointed former Twitch boss Emmett Shearer as interim CEO. It’s unclear what Microsoft’s new research team will look like, but the appointment was certainly a strong move on Nadella’s part.

“We look forward to moving quickly to provide them with the resources they need to succeed,” Nadella said in the post. He suggested that Microsoft might be willing to hire Altman-loyalists who split from OpenAI. “We look forward to getting to know and working with Emmett Shearer and OAI’s new leadership team,” he said.

Altman responded on the X, “Mission continues.”

Although the stock pop is sure to please Microsoft leadership, not everything is sunshine and rainbows ahead. The company is now responsible for the creation (and cost of fielding) of the new AI research organization under Altman and Brockman. And it may still have to pay billions in existing contracts to a new company. Luck Editor-in-chief Alison Shontelle reports.

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Source: fortune.com

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