On Monday, Microsoft’s stock hit a record high following the announcement that Sam Altman, the former CEO of OpenAI, will lead the company’s artificial intelligence innovation division.
The tech giant’s shares increased 2.1% on Monday to close at an all-time high of $377.44. Shattering the previous record of $376.17.
Following a back-and-forth over the course of a weekend, Altman has left OpenAI. Rather, Microsoft has hired him and fellow OpenAI co-founder Greg Brockman to head a brand-new advanced AI research team, according to Nadella.
The Verge revealed on Monday afternoon that Altman’s Microsoft agreement is not official.
The past few days have been the “most eventful” in Rishi Jaluria’s over ten years as managing director of RBC Capital Markets, which covers software. Jaluria described the outcome as a “huge coup for Microsoft,” noting that the company is still at the forefront of generative AI.
Everyone, I believe, was concerned that innovation would not happen as quickly. Microsoft’s artificial intelligence (AI) advantage would eventually wear off, Jaluria said on Yahoo Finance Live. “People would become anxious. I believe that Microsoft is in the best possible position by bringing in Sam and Greg, as Sam is truly the ultimate visionary when it comes to AI.”
This comes after a boardroom coup resulted in Sam Altman’s resignation from OpenAI on Friday. Which caused Microsoft shares to drop 1.7%. With a $13 billion investment in the artificial intelligence company, Microsoft is by far the largest shareholder.
Additionally joining Microsoft is Greg Brockman, who co-founded OpenAI but left after Altman was fired.
Days of conjecture that the former CEO might rejoin the company following his abrupt termination came to an end with Altman’s hiring. Interim Chief Executive Emmett Shear, a former CEO of Twitch, a streaming service owned by Amazon, will take over for OpenAI Chief Technology Officer Mira Murati.
This year, Microsoft’s stock has increased by roughly 56%. The stock is one of the “Magnificent Seven” that, along with Wall Street’s wager that artificial intelligence will be the next big thing in technology, have driven the majority of the market’s returns this year.
After Altman, and Brockman were hired, Wedbush Securities tech analyst Dan Ives reaffirmed his $425 price target for Microsoft’s stock.
On Monday, some of the other “Magnificent Seven” received a boost. In front of Tuesday’s expected earnings, Nvidia’s stock rose 2.3% to close at $504.20, setting a new high for the chipmaker.
With Altman and Brockman joining the company, “we view Microsoft now even in a stronger position from an AI perspective,” Ives stated in a note on Monday.
Investors continue to be concerned about the potential short-term effects of uncertainty at OpenAI on Microsoft’s business. During the company’s most recent earnings call, Nadella mentioned that OpenAI was using Microsoft’s Azure cloud services.
Kirk Materne, an analyst for Evercore ISI, pointed out that Altman’s hiring has essentially “contained” any fundamental risk to Microsoft.
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