AI Daily: Group led by Musk makes $97.4B bid for control of OpenAI

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

BID FOR OPENAI CONTROL: A consortium of investors led by Tesla (TSLA) CEO Elon Musk is offering $97.4B to buy the nonprofit that controls OpenAI, the company behind ChatGPT. Musk’s attorney, Marc Toberoff, said he submitted the bid to OpenAI’s board of directors Monday, according to The Wall Street Journal. “It’s time for OpenAI to return to the open-source, safety-focused force for good it once was. We will make sure that happens,” Musk is quoted as having said in a statement provided by Toberoff. In 2019, after Musk left the company and Sam Altman became chief executive, OpenAI created a for-profit subsidiary that has served as a vehicle for it to raise money from Microsoft (MSFT) and other investors, the report noted.

Sam Altman, the CEO of the company behind ChatGPT, stated in a post on X, “no thank you but we will buy twitter for $9.74 billion if you want” in apparent reply to the reported offer.

IN-HOUSE CHIP DESIGN: OpenAI is finalizing its first in-house chip’s design in the next few months in an effort to reduce its reliance on Nvidia (NVDA), and plans to send it for fabrication at TSMC (TSM) with the goal of mass production at TSMC in 2026, Reuters’ Anna Tong, Max A. Cherney, and Krystal Hu report. The chip is being designed by OpenAI’s in-house team led by Richard Ho in collaboration with Broadcom (AVGO), the report notes.

AI PARTNERSHIP: Apple has recently started working with Chinese internet giant Alibaba to develop artificial intelligence features for iPhone users in China, The Information’s Qianer Liu and Jing Yang report. Apple had selected Baidu (BIDU) as its main partner last year, but the Chinese company’s progress in developing models for Apple Intelligence fell short of its standards, the report said.

CRITICAL CATALYST: After The Information reported that Apple has partnered with Alibaba to bring AI features to iPhone users in China, Morgan Stanley says that if such a partnership is confirmed, the firm would view it as “a critical catalyst for Apple’s competitive standing in China.” While admitting to no knowledge of Apple’s internal decisions, Morgan Stanley notes Alibaba is the largest e-commerce player in China, so it could have “a treasure trove of data that Apple could look to leverage in delivering personalized GenAI features to Chinese consumers,” says the analyst, who adds that the firm could also see a scenario where Apple creates an initial AI partnership with Alibaba that eventually expands to other local Chinese cloud players over time. The firm maintains an Overweight rating and $275 price target on Apple shares.

AI FEATURES IN CHINA: Following The Information’s report, BofA notes Apple’s smartphone share has been pressured in China, and while it was announced last year that Apple was partnering with Baidu for AI in China, Apple ended the project because Baidu’s models developed for Apple Intelligence were not up to Apple’s standards. Tuesday’s news shows Apple’s desire to swiftly launch AI features in China, the firm says. BofA has a Buy rating and $265 price target on Apple shares.

COST CLAIMS EXAGGERATED: Google (GOOGL) DeepMind CEO Demis Hassabis says DeepSeek’s $5.6M training cost claim is “exaggerated and a little bit misleading,” Bloomberg’s Yazhou Sun and Tom Mackenzie report. Hassabis, who runs the AI unit of Google, told Bloomberg Television that DeepSeek “seems to have only reported the cost of the final training round, which is a fraction of the total cost.” DeepSeek is a Chinese-built large-language open-source model that claims to rival offerings from Microsoft-backed OpenAI’s ChatGPT and Meta Platforms (META) but using a much smaller budget. OpenAI and Microsoft Corp. are investigating whether a group tied to DeepSeek obtained data from OpenAI using a process known as distillation, and Hassabis told Bloomberg TV that DeepSeek seems “to have relied on some Western models to distill from,” without offering specifics.

FURIOSA: Meta Platforms is in talks to acquire South Korean artificial intelligence chip startup FuriosaAI and a could be completed as early as this month, John Kang of Forbes reports, citing people familiar with the matter. Meta is one of several companies in talks to acquire FuriosaAI, a source told Forbes. The website says the takeover could boost Meta’s custom chip efforts amid a shortage of Nvidia chips and a growing demand for alternatives.