Well, that was unexpected. Out of the blue, on Friday, OpenAI’s board announced that Sam Altman will be relieved of his CEO duties, with the press release saying it “no longer has confidence in his ability to continue leading OpenAI.” In the meantime, Chief Technology Officer Mira Murati has been selected as interim CEO.
The move caught Wall Street by total surprise – a turn of events that Wedbush’s Dan Ives, a 5-star analyst rated in the top 2% of the Street’s stock pros, calls a “complete shocker,” highlighting the seismic impact this decision is having in Silicon Valley. Altman was considered the “golden child of the AI world and a key figure in getting ChatGPT and OpenAI to their current state.”
The immediate response was a drop in Microsoft’s (NASDAQ:MSFT) share price, given the tech giant’s heavy investment in the ChatGPT creator. Interestingly, Microsoft was apparently completely unaware such a move was about to take place, learning of Altman’s sacking only a minute before the news was made public.
Microsoft’s Co-Pilot and enterprise strategy uses OpenAI’s AI technology as its backbone and while there should be no major changes felt there, Ives believes that “losing the key torch bearer around the AI strategy in Altman as well as Brockman (the OpenAI president and co-founder who later that night also quit his position) is a “clear near-term (and potentially long-term) blow to some of the future strategic initiatives at OpenAI.” That said, due to its importance, Ives also anticipates Microsoft will now “exert more control” over OpenAI.
Altman’s departure and the ensuing mayhem raises many questions about what will happen next, not least how rivals Amazon and Google will “use this near-term chaos to their advantage” as they attempt to close the gap on the current AI leader. Moreover, there’s the question regarding where Altman and Brockman will be heading to next.
While Altman has stirred up controversy within the tech sector, he has undeniably become the “face of AI globally” and is poised to receive numerous opportunities in the months ahead. His removal transforms him from an ally to a potential adversary for Microsoft, who found themselves in the position of outsiders when this information was first disclosed.
That said, the latest news on the grapevine is that Microsoft and other investors are pushing for Altman’s reinstatement and things could yet further change as the story develops. “We would expect to hear more from Altman and other parties as this soap opera plays out in real time over the coming days,” Ives summed up.
Meanwhile, Ives maintained an Outperform (i.e., Buy) rating on MSFT to go alongside a $425 price target, suggesting shares have room for 15% growth over the coming months. (To watch Ives’ track record, click here)
Almost no one is arguing with that take on Wall Street. MSFT’s Strong Buy consensus rating is based on 30 Buys and just a single Hold. Going by the $408.89 average target, a year from now, shares will be changing hands for a 10.5% premium. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
