With CEO Sam Altman’s dismissal, OpenAI’s future is uncertain, and the long-term effects are also unknown. A offer for insiders to cash out equity at a $86 billion valuation appears to be dead on arrival, and the firm that gave the world ChatGPT appears to be an empty shell with most of its staff ready to go and follow Altman to Microsoft.
However, one champion stands out. Based on estimations by Fortune, Microsoft’s market capitalization increased by $63 billion since Friday’s closure. The company’s shares hit an all-time high of $378 per share on Monday during lunchtime trade. Based on its outstanding 7.429 billion shares, Microsoft’s market capitalization will reach $2.82 trillion if that price holds by Monday’s market close.
For Microsoft and CEO Satya Nadella, who may have easily ended up losing the most in the scandal, this is a stunning turn of events. Microsoft has invested $13 billion in the firm and has integrated OpenAI’s technology into a wide range of its products, including GitHub and Office 365.
Nadella’s plan was directly threatened by the statement released by OpenAI’s board on Friday, which stated that Altman was fired because “he was not consistently candid in his communications.” In fact, Microsoft’s stock dropped by almost 2% in the minutes following the news on Friday afternoon, from $373 to $367 per share. This represents a significant loss for a firm whose market capitalization is close to $3 trillion.
Wedbush analyst Dan Ives stated in a note to clients on Monday, “If Microsoft lost Altman he could have gone to Amazon, Google, Apple, or a host of other tech companies craving to get the face of AI globally in their doors.”
A “World Series of Poker move for the ages,” according to Ives, was Nadella’s capitulation in the face of criticism when he revealed at midnight on Sunday that he had appointed Altman and former OpenAI President Greg Brockman to head a new AI research facility inside Microsoft.
Or, in the pithy words of Macquarie Equity Research analysts in the heading of their memo to Microsoft shareholders: “When you come at the king you better not miss.”
Microsoft will continue to hold a sizable share in OpenAI and hire two of its most prominent employees. Emmett Shear, the former CEO of Twitch, was named by OpenAI as an acting CEO. Although the makeup of Microsoft’s new research team is unknown, Nadella made a bold step in selecting this person.
In the essay, Nadella expressed excitement about “moving quickly to provide them with the resources needed for their success,” implying that Microsoft would be open to hiring Altman-loyalists who leave OpenAI. He continued, saying, “We’re excited to work with Emmett Shear and OAI’s new leadership team.”