Microsoft, the technology giant that ranks as one of the world’s most valuable companies, was shaken by the upheaval at OpenAI, the small but influential artificial intelligence startup that developed the ChatGPT chatbot, before it found a way out of the turmoil that propelled its shares to a new high.
The unexpected ouster on Friday of Sam Altman, OpenAI’s co-founder and CEO, set off a chain of events that erased tens of billions from Microsoft’s market value, a sign of how important OpenAI is to the tech behemoth. Microsoft has invested more than $13 billion in OpenAI, and Apple, Google and Meta have rushed to catch up with their own AI offerings.
Microsoft’s stock has been on a roller coaster since Altman’s departure from OpenAI, dropping on Friday and continuing to slide in after-hours trading. Over the weekend, the company led an effort to try to convince OpenAI’s board to reinstate Altman, a charismatic, well-connected founder in Silicon Valley.
In the end, Microsoft said late Sunday that it would hire Altman and Greg Brockman, OpenAI’s president and a company co-founder who quit in solidarity with Altman. The two men will lead an advanced research lab at Microsoft, “setting a new pace for innovation,” said Satya Nadella, Microsoft’s CEO.
On Monday, Microsoft’s stock recovered the ground it had lost, and then some: It rose more than 2% to a record high, as analysts praised the company for hiring the OpenAI outcasts.
The rally extended past Microsoft, with other AI-related companies, including chipmakers Nvidia and Broadcom, reaching new highs as well. The tech-heavy Nasdaq index was up 1.13% at the close on Monday.
Microsoft’s stock had been on a steep rise for the past month after it reported a boom in profit in its most recent quarter. The company’s price per share at the end of the trading day on Monday was $377.44, beating its previous record of about $376.20 set on Thursday.
“While the events over the weekend were surprising and concerning, ultimately we believe Microsoft is actually in a stronger position now than before when it comes to AI,” analysts at RBC wrote in a research note.
Nearly all of OpenAI’s staff, including those in the top ranks, signed a letter to the board threatening to leave the startup for Microsoft if Altman isn’t reinstated as the company’s leader. That list included OpenAI’s chief scientist, Ilya Sutskever, who is a board member.
“We think Mr. Nadella may have pulled off his own coup, acquiring the most important part of OpenAI: its ambitious talent,” said researchers at Macquarie. And some believe that the high-stakes drama over control of OpenAI could, ultimately, be a good thing for companies like Microsoft that are commercializing their AI capabilities. “This publicity will draw further investment and enterprise attention to AI,” according to analysts at Oppenheimer.
OpenAI named its second interim CEO in two days, tapping Emmett Shear, the former CEO of Twitch. Mira Murati, a longtime OpenAI executive, was initially made interim chief after Altman’s departure.