Microsoft has swiftly responded to the fallout from Sam Altman’s firing at OpenAI by bringing him on board as their own CEO. This strategic move is expected to have a significant impact on the artificial intelligence (AI) competition, pitting Microsoft against tech giants like Google-parent Alphabet and Amazon.com. By hiring Altman directly, Microsoft has not only solidified its position but also bolstered its in-house AI team, enhancing its capabilities alongside its existing 49% stake in OpenAI.
Though it remains to be seen how much talent loss OpenAI will experience, industry experts believe that the risk for Microsoft is minimized with Altman and his team active within the company. Adopting a long-term perspective, Evercore analyst Kirk Materne suggests that Microsoft’s decision to hire Altman may ultimately yield better outcomes compared to the previous status quo.
In response to this development, Microsoft stock experienced a 0.9% increase during premarket trading on Monday, while Alphabet saw a corresponding 0.9% decline, and Amazon remained relatively stable.
Despite Microsoft’s strategic move, there are still potential opportunities for Google and Amazon to exploit. Altman recently revealed that OpenAI was in the early stages of developing its latest AI model, GPT-5. However, it is likely that this progress will be hindered by the organizational changes caused by Altman’s departure. Even if Altman’s new team takes charge of developing the next generation of AI models, Microsoft will need to invest time and resources to build the necessary personnel infrastructure.
This delay could potentially open doors for Google and Amazon to surpass OpenAI’s technology as the industry benchmark. Reports from The Wall Street Journal indicate that Google has been working on its own AI model called Gemini, which is expected to rival GPT-4 and is set to be released in the coming months. Similarly, Amazon is also investing in its own AI model known as “Olympus,” which possesses the potential to surpass both OpenAI and Alphabet’s technology, according to Reuters.
Google and Amazon’s advancements in AI could also be facilitated by their ability to attract top talent from a new recruitment pool. OpenAI had been considering a share sale valued between $80 billion to $90 billion, but the recent upheaval within the company may jeopardize this valuation and motivate employees to seek opportunities elsewhere.
OpenAI Employees Pursued by Rivals, Including Nvidia
OpenAI, the renowned artificial intelligence research laboratory, is facing the potential loss of some of its talented employees as rival companies seek to take advantage of the recent shake-up. While Sam Altman, the CEO of OpenAI, is undoubtedly a respected figure within the organization, it cannot be denied that his departure has left some employees considering alternative career paths.
One company in particular, Nvidia (NVDA), has wasted no time in expressing its interest in hiring engineers and researchers from OpenAI. In a recent social media post on X (formerly known as Twitter), Jim Fan, an AI research scientist at Nvidia, explicitly mentioned OpenAI employees as key targets for recruitment.
The situation for Nvidia as a whole is complex. If Microsoft intends to provide both OpenAI and its own in-house team, led by Altman himself, with sufficient computing capacity to train AI models, it may be necessary for Microsoft to increase its planned chip purchases, potentially from Nvidia. However, it is worth noting that Altman has also been exploring opportunities in the Middle East for a new start-up focused on developing affordable chips specifically designed for training AI models. This indicates a potential interest in in-house hardware, which could expedite Microsoft’s ongoing efforts to reduce its reliance on external chip suppliers like Nvidia.
As news of the OpenAI shake-up spreads, Nvidia’s shares have experienced a modest 0.8% increase in premarket trading. The company is scheduled to release its earnings report on Tuesday.
In addition to the shifting landscape for companies involved in AI research and development, the disruptions at OpenAI may prompt a greater emphasis on the structural aspects of AI start-ups. Microsoft’s lack of representation on OpenAI’s board, which was structured as a nonprofit organization with a focus on promoting societal benefits, is one such example. In contrast, Anthropic, another AI start-up backed by major players like Amazon and Google, has adopted a public-benefit corporation model. This means that its board strives to strike a balance between financial interests and responsible AI development. Furthermore, Anthropic’s trust structure ensures that an independent body of trustees will gradually assume the majority of board positions over time.
While these alternative structures are intended to mitigate the risks associated with AI development, the recent events at OpenAI could potentially make corporate backers more cautious about their effectiveness in practice.