Microsoft heads for record closing after announcing Altman will join staff
Microsoft Stock (MSFT) have been trading higher all day and are up over 2.2%. If the stock closes above $376.17, it will be at an all-time high.
The move comes after Sam Altman's ouster at OpenAI shocked the tech world over the weekend, surprising everyone from Microsoft's CEO. Nadella Satya to Wall Street investors and Silicon Valley venture capitalists.
After a weekend of back-and-forth, Altman and OpenAI co-founder Greg Brockman joined Microsoft to lead a new advanced AI research team, according to Nadella.
RBC Capital Markets CEO Rishi Jaluria described the last few days as the "most eventful" in his more than a decade covering software. Jaluria called the final result a "huge blow for Microsoft," as he still sees the tech giant as a leader in generative AI.
"I think the concerns that everyone had were that the pace of innovation would slow, part of the AI โโhalo that surrounds Microsoft and that it has been enjoying in its [stock] multiples would begin to dissipate," Jaluria told Yahoo Finance Live. "Customers would worry. I think bringing in Sam and Greg, and Sam is really the ultimate visionary when it comes to AI, is really the best case scenario for Microsoft."
For investors, there is still concern about how the uncertainty in OpenAI could affect Microsoft's business in the near term. Nadella mentioned on the company's most recent earnings call that OpenAI was using Microsoft's Azure cloud services.
Evercore ISI analyst Kirk Materne noted that any fundamental risks to Microsoft are largely "contained" with Altman now on board.
"When taking a long-term view, hiring Altman and the team could end up being a better outcome compared to the status quo before," Materne said. "Clearly, there is still some risk to Azure if OpenAI's growth slows materially, but we believe the long-term opportunity around GenAI for Microsoft outweighs any near-term risks associated with OpenAI's disruption."
Oppenheimer analysts Timothy Horan and Edward Yang wrote in a research note on Monday that this is a "win/win" for Microsoft.
In his own note to clients, Wedbush analyst Dan Ives suggested that Altman might have ended up with another competitor, writing: "Instead, he is safe at Microsoft headquarters and now leading key AI efforts." of the company, and we expect many key scientists and developers to leave OpenAI." and go directly to Microsoft."
