Microsoft nabs Sam Altman to lead AI effort following OpenAI boardroom 'train wreck'

A weekend of boardroom drama at OpenAI looks to have ended with founder Sam Altman joining Microsoft and former Twitch executive Emmett Shear taking the helm of the ChatGPT creator.

Nov 20, 2023 - 19:30
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Microsoft nabs Sam Altman to lead AI effort following OpenAI boardroom 'train wreck'

Updated at 8:20 AM EST

Microsoft  (MSFT) - Get Free Report shares powered higher Monday after it said OpenAI founder Sam Altman would lead the tech giant's AI effort following a weekend of boardroom drama that threatened the future of the ChatGPT creator. 

Microsoft said Altman, as well as his close associate Greg Brockman, will lead a newly-created AI team within the group following the ouster of Altman, and the resignation of Brockman, from OpenAI late Friday.  

Several key OpenAI employees also threatened to quit the group, which is credited for firing the starting gun on this year's AI investment rush, after a poorly-articulated statement from the board added to the uncertainty tied to Altman's surprise departure. 

Microsoft CEO Satya Nadella, who lobbied for Altman's return to the helm of OpenAI in the chaotic aftermath of his ousting late Friday, said the tech giant would continue working closely with the ChatGPT creator and its new CEO, former Amazon  (AMZN) - Get Free Report Twitch executive Emmett Shear, in the weeks and months ahead. 

"We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners," Nadella wrote in a post on the X social media website. 

"We look forward to getting to know Emmett Shear and OAI's new leadership team and working with them. And we’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team," he added. "We look forward to moving quickly to provide them with the resources needed for their success."

Microsoft shares were marked 0.9% higher in pre-market trading to indicate a Monday opening bell price of $373.15 each, a move that would value the Redmond, Washington-based group at around $2.8 trillion.

"The train wreck situation at OpenAI created by a four-person board (excluding Altman and Brockman) might go down in tech history as the one of the biggest debacle decisions in the history of Silicon Valley," said Wedbush analyst Dan Ives.

"If Microsoft lost Altman he could have gone to Amazon, Google, Apple, or a host of other tech companies craving to get the face of AI globally in their doors," he added. "Instead he is safely in Microsoft's HQ now leading the company key AI efforts which we expect many key scientists and developers to leave OpenAI and head directly to Microsoft."

Microsoft stock has added more than $1 trillion to its market value so far this year, and alongside Nvidia  (NVDA) - Get Free Report, has become one of the hottest tech names in the market, since unveiling a $10 billion investment in OpenAI, the maker of the AI-powered ChatGPT search engine tool, in early January.

Microsoft's overall investment of $13 billion, which translates to an equity stake of around 49% in OpenAI, did not come with a board seat. OpenAI's value was last estimated at around $86 billion. 

The group has touted the potential of ChatGPT, a tool that uses human language to process instructions and which is being embedded in the tech group's also-ran search engine Bing, to close the gap on market leader Google, the eponymous lead product of parent company Alphabet  (GOOGL) - Get Free Report.

Investors are betting that AI adoption will help Microsoft -- which generated just $3.2 billion in search revenue last year -- challenge the market dominance of Google, which churned around $43 billion.

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