Sam Altman to Head Microsoft’s New AI Team after OpenAI Ouster
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The last couple of days have been quite happening for OpenAI cofounder Sam Altman and after the board ousted him as the CEO of the company, Microsoft announced that he would head its new AI team.
OpenAI has hired former Twitch CEO Emmett Shear to head the company after having previously announced its chief technology officer Mira Murati as the interim CEO. While announcing Altman’s departure, OpenAI’s board said, “Mr. Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI.”
Altman to head Microsoft’s AI operations
There were reports that some of OpenAI’s investors including Microsoft were trying to bring back Altman into the ChatGPT parent. However, eventually, Microsoft – which announced a multi-billion-dollar investment in OpenAI earlier this year said that Altman and Greg Brockman, former OpenAI president and board chair would head the company’s AI operations.
He also said, “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. We look forward to getting to know Emmett Shear and OAI’s new leadership team and working with them.”
Several OpenAI employees have threatened to resign after Altman was ousted
Reportedly, several OpenAI employees have threatened to resign and join Altman if he is not reinstated as the CEO. Mira Murati and OpenAI COO Brad Lightcap are among the signatories to the letter addressed to the board. The letter says, “The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company.” It adds, “Your conduct has made it clear you did not have the competence to oversee OpenAI.”
The signatories have also said that they would join Microsoft if Altman is not bought back and said, “We are unable to work for or with people that lack competence, judgement and care for our mission and employees. We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman. Microsoft has assured us that there are positions for all OpenAI employees at this new subsidiary should we choose to join. We will take this step imminently, unless all current board members resign, and the board appoints two new lead independent directors, such as Bret Taylor and Will Hurd, and reinstates Sam Altman and Greg Brockman.”
AI war is heating up
The AI war has been heating up and tech giants like Microsoft, Amazon, and Alphabet are investing in the technology to gain an upper hand over rivals. There is also an AI war between the US and China and the former has banned the exports of several high-end chips to China on fears that they might be used in military technologies.
Nvidia is among the beneficiaries of the AI pivot
Nvidia is among the beneficiaries of the AI pivot and became a trillion-dollar company amid soaring demand for its chips. Earlier this month, the company unveiled its most powerful H200 chip.
The demand for Nvidia’s high-end chips has soared in 2023 amid the artificial intelligence (AI) pivot. The company’s chips are a key building block for generative AI models and the euphoria has helped drive Nvidia’s earnings as well as stock price higher
While Nvidia shares have suffered pullbacks amid the broader market correction and apprehensions over the US banning exports of several high-end chips to China– including some produced by Nvidia – the stock is now again approaching its all-time highs.
Nvidia to release Q3 earnings tomorrow
Nvidia is set to release its fiscal Q3 2023 earnings tomorrow. Analysts expect the company to report revenues of $15.9 billion in the quarter – a YoY rise of almost 170%. Analysts expect the company’s revenues to rise 191% and 154% respectively in the next two quarters as well.
While the massive YoY spike is arguably coming from a lower base as Nvidia’s revenues fell YoY in the corresponding quarters in the previous fiscal year due to sagging sales at its Gaming segment, it is nonetheless no mean achievement and highlights why markets see the stock as a preeminent AI play.
Analysts believe Microsoft has emerged as a winner in the AI saga
Meanwhile, most Wall Street analysts believe that Microsoft has emerged as a winner in the Altman ouster saga. Oppenheimer termed Microsoft hiring Altman as a “major” win and reiterated the stock as overweight. It said in its note, “While we don’t think this story is over, former OpenAI CEO Sam Altman and key employees are Microsoft employees for now, a major MSFT win.”
Wedbush Securities analyst Dan Ives said, “If Microsoft lost Altman, he could have gone to Amazon, Google, Apple, or a host of other tech companies.”
He added, “Instead he is safely in Microsoft’s HQ now. We view Microsoft now even in a stronger position with Altman and Brockman at Microsoft running AI.”
Chip industry newsletter SemiAnalysis said, “The OpenAI for-profit subsidiary was about to conduct a secondary at a $80 billion+ valuation. These ‘Profit Participation Units’ were going to be worth $10 million+ for key employees. Suffice it to say this is not going to happen now.”
It added, “If the team went down the startup path, they would have had to spend significant time rebuilding GPT-4. Instead, at Microsoft they will have access to much of the IP they require for future products.”
Microsoft stock is higher in early price action today
Meanwhile, Microsoft stock is trading higher in early price action today and has hit its all-time highs after announcing that Altman would join the company. As the AI war heats up, the hunt for talent is also rising and markets believe that having Altman onboard would give Microsoft an edge over other tech companies.