Microsoft has found itself at the forefront of the OpenAI upheaval, capitalising on the turmoil by securing ousted CEO Sam Altman and essential staff. According to Reuters, the two-fold strategic move has prevented a potential talent drain to competitors and has sent Microsoft’s valuation soaring.
This unexpected development is poised to significantly impact the tech giant’s market value, with shares surging and the company on track to add nearly $30 billion at current levels.
Microsoft’s shares experienced a surge, rising as much as 2 per cent to reach a record high, demonstrating the positive market response to the strategic hiring from OpenAI. The company was poised to add nearly $30 billion to its market value, approaching the valuation that OpenAI commanded in its last fundraising round.
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“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.
(With inputs from Reuters)
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