Investors are showing a surge of interest in OpenAI and Microsoft stock as the drama surrounding OpenAI CEO Sam Altman unfolds. Following Altman’s firing and subsequent re-hiring, there has been a significant increase in potential investors in OpenAI, the AI software company behind ChatGPT. According to an analysis by Venture Smarter, Google searches for OpenAI stock skyrocketed by 1,200% compared to a 90-day high on November 18th, the day after Altman’s firing became public knowledge. Two days later, searches increased again by 354% after reports of an employee revolt emerged.
While this spike in investor interest is indeed good news, there’s a catch. OpenAI is a private company, and its stock is not available for public trading on the stock market. Currently, only accredited investors can purchase the stock from existing private company shareholders when it becomes available on private stock exchanges like Forge. In September, before the Altman controversy, OpenAI was planning to sell shares for employees at a valuation of $80-$90 billion. However, the current status of this share sale remains uncertain.
However, the situation presents an alternative for most investors who can’t access OpenAI stock. Microsoft (NASDAQ: MSFT) emerges as the next best option. In January 2023, Microsoft invested $10 billion in OpenAI at a valuation of $29 billion, acquiring a 49% stake. The value of this stake has the potential to triple their initial investment. Notably, during Altman’s firing, Microsoft intended to hire him to continue his AI work. Ultimately, Microsoft supported Altman’s return to OpenAI under a new board structure. As a result, interest in Microsoft’s stock has also surged, as indicated by Venture Smarter. On the same day Altman was fired, searches for ‘Buy Microsoft stock’ and ‘MSFT’ jumped by 371% and 526% respectively. Prior to Thanksgiving, Microsoft achieved new all-time highs in intra-day and closing stock prices.
Commenting on the situation, Mizuho analyst Gregg Moskowitz expressed confidence in Microsoft’s strong position. He stated that regardless of whether Altman reports directly to CEO Satya Nadella, Microsoft stands to gain the most from generative AI. Moskowitz expects Microsoft’s partnership with OpenAI to remain robust. He also affirmed his positive outlook on Microsoft, anticipating greater growth opportunities beyond what many realize, particularly in Generative AI monetization. Moskowitz rates Microsoft’s shares as a Buy, with a target price of $420 and a Top Pick designation.
In conclusion, the firing and re-hiring of OpenAI CEO Sam Altman have sparked a considerable increase in investor interest in both OpenAI and Microsoft stock. Although OpenAI’s stock is not publicly available, Microsoft presents an attractive alternative for investors. With a substantial stake in OpenAI and a strong partnership, Microsoft is poised to benefit from the potential of generative AI. As the situation unfolds, investors are eagerly watching market developments for both companies.
