Microsoft emerged as the big winner of the OpenAI turmoil on Monday, hiring ousted CEO Sam Altman and other key startup staff to stave off a potential flight to rivals and help deepen its lead in the artificial intelligence race .
The turmoil at OpenAI since Friday had raised fears about the fallout for Microsoft, which has pumped in billions of dollars and uses the pioneer’s technology for most of its AI offerings.
The move ensured that “the golden child of AI” will remain at Microsoft, analysts said, as the company competes with Alphabet-owned Google to dominate the emerging industry.
Shares of Microsoft rose about 1.5%, with the company on track to add nearly $30 billion to its market value at current levels. That was almost equal to the valuation OpenAI commanded during its last fundraising.
“If Microsoft lost Altman, he could have gone to Amazon, Google, Apple or any number of other tech companies,” said Wedbush Securities analyst Dan Ives.
“Instead, he is now safely at Microsoft headquarters. In fact, we now see Microsoft in a stronger position with Altman and Brockman using AI at Microsoft.
Altman will lead a new research team at the software giant following his surprise ouster by OpenAI, which shocked the tech industry. He will be joined by Greg Brockman, another co-founder of OpenAI, and other researchers including Szymon Sidor.
Analysts also said more employees could move to Microsoft as the unrest could impact what was expected to be a stock sale at an $86 billion valuation by the startup, potentially impacting employee benefits at OpenAI.
“The for-profit subsidiary OpenAI was about to launch a secondary operation with a valuation of over $80 billion. These ‘Profit Participation Units’ would be worth over $10 million to key employees. Suffice to say, this not going to happen now,” says Chip. industry newsletter SemiAnalysis said.
Several employees of the startup, including former interim CEO Mira Murati, said in posts on social media platform X on Monday that “OpenAI is nothing without its people.”
At Microsoft, the Altman-led team will also likely have greater access to the computing power it needs, as the company is the second-largest U.S. cloud player and has committed to spending billions to expand the capacity of its data centers.
“If the team were to follow the startup path, they would have had to spend a lot of time rebuilding GPT-4. Instead, they will have access to much of the IP they need for future products at Microsoft “, according to SemiAnalysis.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)