Microsoft Corp (NASDAQ: MSFT) is looking to make an even bigger dive into the world of artificial intelligence. The software giant is allegedly considering a whooping $10 billion injection into OpenAI, the research lab behind the widely-captivating ChatGPT chatbot.
According to newsite Semafor which cited individuals familiar with the matter, Microsoft is looking to invest $10 billion into OpenAI, in a move that would significantly cement the software company’s dominance with the breakthrough technology. As per the deal, Microsoft would receive 75% of all profits OpenAI generates until its initial investment is reimbursed, before shifting into a business model whereby the software giant owns 49%, investors get a 49% stake, and the remaining 2% is given to OpenAI’s parent company.
This is not the first time Microsoft has taken major interest in OpenAI’s artificial intelligence software. Back in 2019, Microsoft made a $1 billion investment comprised of cash and cloud credits into Open AI, and is also in the midst of creating a chatbot software version of its search engine Bing, powered by ChatGPT.
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The full details of the potential investment— or whether the deal has closed— remain unknown. Initially reported by the Wall Street Journal, the chatbot research lab is also considering allowing its shareholders and employees to sell $300 million worth of shares in a tender offer that would bring its valuation to $29 billion.
Aside from the obvious financial risks stemming from such a sizeable investment into a tech company that has yet to turn meaningful revenue, Microsoft’s early partnerships with OpenAI will put it at the forefront of the emerging artificial intelligence space. According to The Information, Microsoft is looking to merge some of the ChatGPT features into its cloud business, creating a leveraged position to compete with rivals Amazon Web Services and Google.
Information for this briefing was found via Semafor, the Wall Street Journal, The Information, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
