Microsoft has taken advantage of the OpenAI turmoil, hiring former CEO Sam Altman and key staff who were forced out. Reuters reported that the dual strategic move has stopped a possible loss of talent to rivals and has boosted Microsoft’s valuation.
This surprising development is likely to affect the tech giant’s market value significantly, with shares skyrocketing and the company on the way to add nearly $30 billion at current levels.
Microsoft’s shares spiked, climbing as much as 2 per cent to reach a record high, indicating the positive market feedback to the strategic hiring from OpenAI. The company was ready to add nearly $30 billion to its market value, close to the valuation that OpenAI attained in its last fundraising round.
“Microsoft has been able to turn a crisis into an opportunity with the hiring of Sam Altman and Greg Brockman,” Reuters quoted Gil Luria, senior software analyst at D.A. Davidson as saying. The surge in Microsoft’s shares showcases the market’s favourable view of the company’s ability to navigate the complexities of the OpenAI position and strengthen its base in the AI race.
The letter from around 500 OpenAI employees, threatening to leave unless Altman and Brockman were reinstated, adds another layer to the story. The potential exodus was driven by concerns over governance and the impact on a planned share sale at an $86 billion valuation, potentially affecting staff payouts at OpenAI. Microsoft’s assurance to these employees of positions at the new subsidiary, combined with the surge in shares, is an added advantage.
“The OpenAI for-profit subsidiary was about to conduct a secondary at a $80 billion+ valuation. These ‘Profit Participation Units’ were going to be worth $10 million+ for key employees. Suffice it to say this is not going to happen now,” a newsletter by SemiAnalysis said.
The valuation dynamics not only impact OpenAI but also position Microsoft as a key player in shaping the future of artificial intelligence.