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What Was OpenAI Thinking?

by | Nov 20, 2023

It’s very rare that I look at a stock that’s trading at a P/E ratio of 36… and with a price-to-sales ratio of 13 and suggest it might be a value stock. 

But that’s the case right now with one technology stock that might have just pulled off one of the greatest coups in the history of hiring. As the artificial intelligence race accelerates, investors need to take stakes in this company — even if it’s a very small amount of money with just a few shares. 

I’m talking about Microsoft Corp. (Nasdaq: MSFT). Over the weekend, Microsoft hired one of the most important names in AI, all because of a huge mistake from the board at OpenAI. Microsoft hired Sam Altman, and now it’s about to beat the doors off anyone trying to expand into the industry. Well done, Microsoft. 

What Was OpenAI Thinking?

I don’t get it.

Over the weekend, OpenAI punted its founder, Sam Altman. I couldn’t believe the news. Neither could anyone who spends their time in technology or in the venture capital world. He and OpenAI co-founder Greg Brockman are no longer at the company behind ChatGPT. 

Now… they’re at Microsoft. It’s a fitting bookend to the story of Microsoft and OpenAI. Microsoft invested $10 billion in OpenAI last January, and will still continue to work beside the tech firm… without Altman running the show.

This is easily the most important hiring of the last five years in the technology space, and instantly cements Microsoft as the emerging leader in generative AI.

For years, questions emerged about how Microsoft would continue growing after cloud computing’s market matures. That’s been the growth catalyst for the last few years under the direction of CEO Satya Nadella.

The hiring of Altman completely changes Microsoft’s destiny. 

It’s also one of the most confusing decisions I’ve seen in a long time of watching tech. Employees aren’t happy that Altman is gone. More than 500 of the company’s employees demanded that the entire board of directors — who forced Altman out — resign. These employees are planning to leave and join the new subsidiary headed by Altman and Brockman at Microsoft. 

Microsoft will not just get those two founders. They’ll be able to hire OpenAI’s team of generative AI data scientists — and compensate them in a damn good stock.

How to Invest in AI

I argue that investors must take stock in MSFT. This has already been one of the most dominant technology companies of the last 30 years. It has consistently reinvented itself from software to cloud to now AI. Despite its valuation, institutional investors continue to crowd into the company and believe its best days are ahead. 

But remember, AI is not just about software. There are plenty of great businesses in the AI space that aren’t your typical names. Companies like Deere & Co. (NYSE: DE) present incredible opportunities in automation and AI in a business that will require even more innovation to meet global food demand. 

A company like Domino’s Pizza (NYSE: DPZ) has been a major player in the delivery space for years — and it’s employing AI to meet customer needs across the board. 

Unconventional AI names are where investors should be in this environment. That’s especially true in beaten-down or undervalued sectors like Energy. 

The future is bright for AI. And investors who follow momentum and capital flows in services like Executive Payouts Unlimited will do very well in this space. Tomorrow, I’ll talk more about these unconventional opportunities. 

Chat soon,

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Garrett Baldwin

*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. 

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WRITTEN BY<br>Garrett Baldwin

Garrett Baldwin

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