OpenAI And Microsoft Are Making Sure They’re Centers Of Attention

OpenAI And Microsoft Are Making Sure They’re Centers Of Attention
Paul Allison, CFA

4 months ago2 mins

Mentioned in story

What’s going on here?

OpenAI made sure that artificial intelligence was still on the main stage, and Microsoft’s stock shot to stardom straight after.

What does this mean?

ChatGPT’s creator OpenAI took to the stage earlier this week, reminding everyone – especially small, competing AI startups – that it’s the one leading the path to a dystopian future. Microsoft popped its head in too, making sure investors remember that as the owner of 49% of OpenAI, the tech titan is a direct beneficiary of all and any success. The point landed: Microsoft’s stock hit a new altitude after the developer event.

Microsoft stock
Source: Google Finance

Why should I care?

Zooming out: Win-wins.

Not all of Microsoft’s success is down to that sweet talking, though. Investors are now pretty confident that the Federal Reserve is staying away from the rate-hiking pedal, which would release some of the pressure that’s weighing down stock prices. Remember, investors value stocks based on their future prospects, and higher rates reduce what a company’s future cash flows are worth today. Thing is, Microsoft likely has the heft it needs to stay stable even if rates end up ticking up or the economy tanks. And even if the stock slips, investors would simply see that as a chance to buy the goliath on the cheap.

For markets: Good things (might) come in threes.

AI investors can’t relax yet. Nvidia – high-tech chipmaker to the super-smart stars – reports its latest set of quarterly results on November 21st, and the stats will offer breadcrumbs about how the AI trend as a whole is doing. Nvidia’s predicted revenue of $16 billion, and more importantly, Wall Street wizards have pinned hopes for this quarter’s takings near the $18 billion mark. But because China’s lagging economy may drag down sales of the company’s chips, Nvidia’s own forecasts will be the ones to watch.

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