Microsoft shares climbed 2.7% in premarket trading, approaching a new record high, following the announcement that OpenAI co-founders Sam Altman and Greg Brockman will head a new cutting-edge AI research division for the tech giant. This development is particularly surprising given that Altman was dismissed from OpenAI just last week, with Emmett Shear, the co-founder of Twitch, a video streaming platform, stepping in as the interim CEO overnight, The Wall Street Journal reported.
Shear’s appointment as OpenAI’s interim CEO marks the second leadership change in three days, following the board’s decision to terminate Altman on Friday and technology officer Mira Murati shortly after.
“I took this job because I believe that OpenAI is one of the most important companies currently in existence,” Shear wrote on social media platform X. He continued, “I want to do everything in my power to protect it and grow it further.”
Today I got a call inviting me to consider a once-in-a-lifetime opportunity: to become the interim CEO of @OpenAI. After consulting with my family and reflecting on it for just a few hours, I accepted. I had recently resigned from my role as CEO of Twitch due to the birth of my…
— Emmett Shear (@eshear) November 20, 2023
On Sunday afternoon, Altman returned to OpenAI’s headquarters, holding a guest pass. The former CEO said, “First and last time I ever wear one of these.”
Co-founder, chief scientist, and board member Ilya Sutskever – who fired Altman – told employees about Shear joining the company late Sunday.
On a side note, Elon Musk has come to the defense of Sutskever’s role in former CEO Sam Altman’s ouster.
“Ilya has a good moral compass and does not seek power,” Musk wrote in a post on X, the platform formerly known as Twitter, on Sunday.
“He would not take such drastic action unless he felt it was absolutely necessary,” Musk continued.
Early Monday morning, Microsoft chief executive Satya Nadella wrote in a post on X, “Excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team.”
We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners. We look forward to getting to know Emmett…
— Satya Nadella (@satyanadella) November 20, 2023
“The mission continues,” Altman wrote on X, commenting on Nadella’s message.
the mission continues https://t.co/d1pHiFxcSe
— Sam Altman (@sama) November 20, 2023
Elon Musk commented on Altman’s post, “Wild Times.”
— Elon Musk (@elonmusk) November 20, 2023
Bloomberg noted some OpenAI employees posted their resignations on X after hearing the news.
OpenAI developer Logan Kilpatrick wrote on the social media, “This has been an utterly devastating last 3 days.”
The abrupt shake-up at the maker of viral chatbot ChatGPT echoes a classic Silicon Valley story: the rift between founders and their board. Some have warned parting with Altman could be disastrous:
Somehow in this epic meltdown, Satya swoops in, wins it all, and wins with grace. I’m floored.
OpenAI was invincible until Friday. Now Microsoft will fully own an in-house GPT-4 in ~9 months, leverage its massive distribution power to spin the biggest data flywheel ever, collect… pic.twitter.com/m6MOchMgLV
— Jim Fan (@DrJimFan) November 20, 2023
OpenAI is going to collapse
Microsoft, Google, and anyone with a budget is going to raid what’s left of the team that doesn’t go with Sam
The entire poker table has been tossed over… chips, drinks, cards, players strewn everywhere — complete chaos.
And chaos is a ladder…
— @jason (@Jason) November 20, 2023
Elon Musk was worried that Microsoft would take control of OpenAI
— Kris Kashtanova (@icreatelife) November 20, 2023
Shares of Microsoft in premarket trading were up as much as 2.7% on the news. The tech giant has an agreement with Open AI valued at around $13 billion (which has not all been spent and includes not just cash but cloud service credits – all of which could be yanked out from under OpenAI now if terms of the agreement are not met). However, a statement from Microsoft on Friday – after Altman’s initial ouster – confirmed it remains committed to its partnership with OpenAI.
Analysts, commenting after Altman’s shock exit, were deeply concerned:
“Train wreck situation at OpenAI might be one of the biggest debacle decisions in the history of Silicon Valley,” Wedbush’s Dan Ives wrote in a note.
Here’s more of what Wall Street analysts are saying (list courtesy of Bloomberg):
Analyst Kirk Materne says the weekend has been full of back and forth regarding the OpenAI drama, but “for Microsoft investors, it ended in a good place with the news”
“While it remains to be seen how much ‘brain drain’ there will be at OpenAI, we think the fundamental risk to Microsoft is largely contained with Altman and team on board”
Altman’s departure could open the way for other foundational models like Meta’s Llama and Google’s Gemini to attract more interest
“The popularity in those open-source large language models may grow if Altman’s exit was related to ChatGPT’s roadmap,” analyst Mandeep Singh writes
RBC Capital Markets
While OpenAI’s management changes can cause some concerns for Microsoft, OpenAI remains a leader, writes analyst Rishi Jaluria Macquarie
Microsoft’s relationship with OpenAI remains intact, analyst Frederick Havemeyer writes, adding that there should be little impact for its Azure business
What a dizzying weekend!
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