Following the ouster of CEO Sam Altman, the future of OpenAI is in question and the ultimate repercussions are unclear. With a majority of OpenAI employees ready to jump ship and follow Altman to Microsoft, the startup that birthed the ChatGPT world looks like an empty shell, and a deal allowing insiders to cash in equity from worth $86 billion is effectively dead on arrival.
But there is clearly a winner. Microsoft has added $63 billion to its market capitalization since Friday’s close, according to Fortunethe calculations of. The company’s stock hit $378 per share as of midday Monday, an all-time high. If that price holds by Monday’s market close, Microsoft’s market capitalization, based on its 7.429 billion shares outstanding, will reach $2.82 trillion.
It’s a remarkable turn of events for Microsoft and its CEO Satya Nadella, who could easily have been the biggest losers in this matter. Microsoft pumped $13 billion into the startup and made OpenAI technology the cornerstone of its product line, integrating it into everything from Office365 to GitHub.
Friday’s statement from the OpenAI board, firing Altman because “he was not always upfront in his communications,” posed a direct threat to Nadella’s strategy. Indeed, minutes after the announcement was made public Friday afternoon, Microsoft’s stock fell nearly 2%, from $373 to $367 per share, representing a notable loss for a company with a market capitalization approaching $3 trillion.
“If Microsoft had lost Altman, it could have gone to Amazon, Google, Apple, or a host of other tech companies hungry to have the face of global AI on their doorsteps,” wrote Wedbush analyst Dan Ives said in a note to investors on Monday.
But Nadella’s reaction under pressure, announcing at midnight Sunday that he had hired Altman and former OpenAI President Greg Brockman to run a new AI research lab within Microsoft, was a “move from the World Series of Poker for the ages,” Ives said.
Or, as analysts at Macquarie Equity Research succinctly put it in the title of their note to Microsoft investors: “When you meet the king, you better not miss him.” »
Microsoft will now employ two of OpenAI’s most influential workers and retain its massive stake in the startup. OpenAI, for its part, named former Twitch boss Emmett Shear as interim CEO. It’s unclear exactly what Microsoft’s new research team will look like, but the hire was certainly a power 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, suggesting that Microsoft might be willing to hire Altman loyalists who have left OpenAI. “We look forward to getting to know and working with Emmett Shear and the new OAI leadership team,” he added.
Altman responded on X: “the mission continues.”
While the stock’s move will certainly please Microsoft executives, there’s not all sunshine and rainbows ahead. The company is now responsible for building (and implementing costs of) the new AI research organization led by Altman and Brockman. And it may still have to pay billions of dollars in existing contracts to a fledgling company, like Fortune reported editor Alyson Shontell.
This story was originally featured on Fortune.com