ChatGPT Parent Open AI gets ‘groundbreaking’ multi-billion dollar boost from Microsoft

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Topline

Microsoft is investing billions more in fast-growing artificial intelligence company OpenAI as its ChatGPT chatbot gains popularity, the companies announced Monday.

Key Facts

Specific financial terms of the “multi-year, multi-billion dollar” deal were not shared, but a source told Bloomberg it is a $10 billion investment, matching reports earlier this month on the size of the investment and an expansion on the $1 billion that Microsoft invested in OpenAI in 2019.

Microsoft shares were up 1% in early trading, and the stock is now up 7% since January 9, when reports first emerged of Microsoft putting nearly $10 billion into OpenAI.

The “next phase” of the collaboration between Microsoft and OpenAI will give the first “access to the best AI infrastructure, models and toolchain with Azure to build and run their applications,” Microsoft CEO Satya Nadella said in a statement at the release.

Key background

A $10 billion investment from Microsoft would value OpenAI at $29 billion, Semafor reported earlier this month, though it’s not known if that valuation will hold up under final terms. ChatGPT was launched to the public last November to spark amazement at the model’s ability to mimic human speech. The OpenAI announcement comes five days after Microsoft announced it will cut 10,000 jobs this year, representing about 5% of its total workforce. Nadella cited AI as one of the main reasons for the layoffs in an email to employees: “The next great wave of computing is being born with advancements in AI as we turn the world’s most advanced models into a new computing platform.”

Crucial quote

Microsoft will “not lag behind what could be a potentially game-changing AI investment,” Wedbush analyst Dan Ives wrote in a note to clients Monday. “In today’s AI race, Nadella & Co. is ahead of the rest of Big Tech and this investment is an important step on the AI ​​belt.”

Read further

Microsoft is reportedly closing a $10 billion investment in ChatGPT Creator OpenAI (TBEN)

Here’s what you need to know about OpenAI’s ChatGPT: what interferes with it and how to use it (TBEN)

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