A mutiny is brewing at OpenAI after the company's board refused to bring back Sam Altman and Greg Brockman – 505 out of 700 employees have asked the company's board to resign.
While Altman has been hired by Microsoft Corp. (NASDAQ:MSFT) now, OpenAI's senior executives, engineers, and researchers are openly voicing their protest now.
The Satya Nadella-led Microsoft is OpenAI's single largest investor, with a 49% stake.
Update: According to veteran journalist Kara Swisher, 505 out of 700 employees have co-signed a letter asking the OpenAI board to resign.
"Your actions have made it obvious that you are incapable of overseeing OpenAI. We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman," the letter says.
The letter says Microsoft has assured that there are positions for all OpenAI employees at the new AI subsidiary. They have demanded the resignation of the existing OpenAI board, reinstatement of Altman and Brockman, and appointment of two new lead independent directors, Bret Taylor and Will Hurd.
Interestingly, Ilya Sutskever, who led the firing of Altman and Brockman, has co-signed this letter, too.
While Altman has been hired by Microsoft Corp. (NASDAQ:MSFT) now, OpenAI's senior executives, engineers, and researchers are openly voicing their protest now.
The Satya Nadella-led Microsoft is OpenAI's single largest investor, with a 49% stake.
Update: According to veteran journalist Kara Swisher, 505 out of 700 employees have co-signed a letter asking the OpenAI board to resign.
"Your actions have made it obvious that you are incapable of overseeing OpenAI. We, the undersigned, may choose to resign from OpenAI and join the newly announced Microsoft subsidiary run by Sam Altman and Greg Brockman," the letter says.
The letter says Microsoft has assured that there are positions for all OpenAI employees at the new AI subsidiary. They have demanded the resignation of the existing OpenAI board, reinstatement of Altman and Brockman, and appointment of two new lead independent directors, Bret Taylor and Will Hurd.
Interestingly, Ilya Sutskever, who led the firing of Altman and Brockman, has co-signed this letter, too.
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NewsTranscript
00:00 We had some huge and I mean huge moves here overnight.
00:04 The stock almost kissed 380, just under 380, 379 change.
00:08 Did you see 380?
00:09 Did it get 380?
00:10 - Let's check this bar.
00:13 Survey says 379.97.
00:15 - Holy, those poll numbers, the big poll numbers coming to play.
00:19 Just under 380.
00:20 So we're up over 10 bucks here at four o'clock this morning.
00:24 We have given back two thirds of that rally now down only up $3 here.
00:30 I think profit takers probably had people buying the dip because buying the dip has
00:34 just been working on the mega cap tech for a long time.
00:37 Obviously we had, you know, bring in Mitch because Mitch is going to have the news here.
00:41 So we know last week, just to update you, I'll get to the news.
00:44 Last week, Sam Altman fired from Chachi PTO.
00:48 - Friday late.
00:50 Yeah, Friday late.
00:51 - They wanted to kick him out.
00:52 - And that's what really hammered Microsoft on Friday.
00:55 Because this is, you know, the brains, the CEO, the brains behind Chachi PT.
01:00 - Everybody freaks out.
01:02 Everybody freaks out, right?
01:03 They're like, oh my God, no, what's going to happen to Chachi PT now?
01:08 What's going to happen to Microsoft's investment in open AI?
01:12 But then they find out that, well, he's joining them.
01:16 He's going over to the, you could say the dark side of things.
01:21 He said, you know what?
01:22 I'll go over to Microsoft and help them out.
01:24 I think this was a clear situation where Microsoft CEO saw an opportunity, right?
01:30 They said, okay, well, you guys are going to oust the person behind this.
01:35 We'll just take him and put him in our AI division and see who else might want to come
01:41 over from open AI.
01:43 Maybe this can help us create our own AI chips, right?
01:47 And things like that, because that's the truth that Microsoft wants to get into.
01:51 They want to compete against Nvidia, possibly create their own AI chips and push that to
01:56 the next level.
01:57 So with Sam Altman now joining Microsoft's team, do you think that Microsoft can now
02:04 take lead here and maybe really compete against Google?
02:08 - Well, I mean, Microsoft here, and obviously the four o'clock traders were really excited
02:14 about this, but you just got to watch what you're paying up for.
02:17 I mean, $10 is probably an overshoot here.
02:19 It's good news.
02:20 Microsoft was actually, Joel, down another $3 after hours.
02:24 So Friday night- - I see that.
02:26 I see that.
02:27 - It was down another three bucks.
02:28 So nobody had a hint of this coming.
02:29 They were like, man, just digesting and saying, without Altman, ChatGP, he is not going to
02:34 be the product that we want to be.
02:36 And then of course, we turn it around, obviously, just on one headline.
02:41 And this is what I talk about.
02:43 Headlines are the drivers that make technicals happen.
02:46 People always ignore headlines, but it's headlines that make those charts, folks.
02:50 And headlines are going to make the Microsoft charts here today.
02:54 It's nothing to do with what the chart looks like.
02:56 The entire Microsoft move here in the pre-market is off of this headline.
03:01 Headlines move stocks.
03:03 - What was this 361 print, Dennis?
03:06 Is that a bad print?
03:07 Did you see this?
03:08 I'm like- - Yeah, at eight o'clock.
03:11 Yeah, those are bad.
03:12 - That was a bad print.
03:13 - Yeah, bad print.
03:14 We got a bunch of- - What a bunch of-
03:15 - Eight o'clock prints, again, if you're new to the show, 8 a.m., you have a lot of, I
03:20 don't even know.
03:21 Like, it's because, again, we don't have, on the FINRA trade reporting facility, we
03:27 don't have transparency there.
03:30 I've asked for transparency to regulators before in open comment letters.
03:34 We've had a number of other market participants want more trade transparency.
03:39 Over 40% of your trades go through FINRA TRF, and that's made up of so many things.
03:44 Markpools, off-exchange market makers, crosses.
03:48 It's just all lumped into one.
03:51 I'd like to see a breakdown a little bit more.
03:53 So at 8 a.m., I assume these are late reported crosses that always come because they're always
03:57 outside the market and you always see these moves.
03:59 But we don't really know because they don't give us enough-
04:01 - They don't know, I know.
04:03 - They don't give us enough transparency on the tape.
04:05 But there's always crazy moves at eight, but these aren't real moves, folks.
04:09 These are trades that have already occurred, and they're not occurring inside the market.
04:13 The 361 trade did not, you couldn't have bought Microsoft at 361 this morning.
04:18 - Yeah, or sold.
04:19 - No.
04:20 - Or on Friday.
04:21 - Or sold.
04:22 That trade, just ignore it.
04:23 It's like, and again, because we don't have transparency in that FINRA tape, we have no
04:28 real idea of what that actually is.
04:32 - You know who this sucks for, right?
04:33 I mean, the technical trader, right?
04:35 It's like, "Oh, hold on.
04:37 There's a line up there, Joel."
04:39 - No, yeah.
04:40 - Yeah, the technical trader's like, "Oh, we got this 361 print, and that's good."
04:44 - "Oh, I'm gonna hold out for that."
04:45 - "Oh, it's an old trade that's probably occurred, just an old cross."
04:48 - Okay, so let me give two comments on this.
04:53 One fundamentally, and then I'll give my technicals on this.
04:57 Fundamentally, I just don't think this is good for Microsoft.
05:00 I mean- - Really?
05:01 - Yeah, yeah, I don't.
05:03 - Why?
05:04 Talk to me about it.
05:05 - Why?
05:06 - Well, I mean, I think this is gonna totally destroy the relationship with C3AI.
05:14 I mean, they fire a guy that they're working on, and then Microsoft hires him?
05:19 Oh, what is he gonna do?
05:20 - Yeah, and again, this is Chad GPT, not C3AI, so just-
05:23 - Right, right, right.
05:24 - Chad GPT.
05:25 They may be looking at the AI, but yeah.
05:28 - Yeah, yeah, Chad GPT, right?
05:32 So I don't know.
05:33 I don't think that's a good relationship right there.
05:40 Just to me, it seems murky, I mean, between the two companies, and they got a lot of money
05:45 invested.
05:46 So they fired the guy, Microsoft hired him.
05:49 They have a big investment in the other company.
05:51 I just don't think it's, I don't see synergies there.
05:54 I don't know.
05:55 I can't tell.
05:56 Initially, the street thought it was bad when he got fired.
06:01 That's my fundamental thing, which doesn't mean a whole lot, but technicals, it's all
06:06 about 367 and Microsoft.
06:09 They had two other lows there last week.
06:12 They slammed it there last night.
06:13 They got a little, slammed it there on Friday, got a little bit under it in the after hours
06:19 trading.
06:20 But as long as it stays above, that's just a huge level.
06:24 Above 367, it's still Microsoft, it's still the bull, whatever.
06:29 I don't know about going back to 380, but if somehow this loses 367, not only might
06:36 that this, Microsoft is going to be in for a decent decline, but you saw what it could
06:41 do to the market as well.
06:42 And again, it's all over the place.
06:45 So obviously the four o'clock traders are like rah, rah, all time highs coming from
06:49 Microsoft.
06:50 They got the brains directly working for them now.
06:53 And that's maybe what the four o'clock traders were thinking.
06:55 And obviously other traders have Joel's point in mind here too, that what goes on now with
07:01 OpenAI?
07:02 What goes on there?
07:04 Is there an issue here?
07:06 Microsoft obviously owns a big part of that company.
07:09 So now they directly own or are directly working with Sam Altman.
07:13 And I don't know if we have answers to all these questions, but I think the market has
07:19 those questions that you're asking, Joel, or we wouldn't see a seven point sell off
07:23 here in the free market at Microsoft.
07:25 Yeah.
07:27 And of course they own majority of it, right?
07:29 They own almost 50%.
07:30 They own 49% stake in OpenAI.
07:33 Is it 49%?
07:35 Yes, 49%.
07:36 This was confirmed from this morning from Reuters.
07:40 But one thing of course is that they're seeking an evaluation, nearly triple of what they
07:46 originally were when Microsoft invested in them.
07:50 They were valued in January at 29 billion and they're seeking a valuation three times
07:56 that now is OpenAI.
07:59 So at some point, maybe this gives the room for Microsoft just to start developing their
08:06 AI chip until it can come to a point of maybe where they can buy OpenAI completely.
08:12 Right?
08:13 I mean, or at least take a majority stake.
08:15 I don't know if they wanted to do that.
08:17 I think there was other reasons for them not owning 100% of the company.
08:20 I read something on it last week, but I don't know.
08:24 Again, this is above our pay grade on this year.
08:26 It is.
08:27 It is.
08:28 It is.
08:29 That's the one.
08:30 Speculate on why.
08:31 This is more acquisitions.
08:32 You know, firing Altman, now bringing them on Microsoft directly.
08:33 Is it good?
08:34 Is it bad?
08:35 I mean, obviously it was bad for the stock when they were losing Altman.
08:36 They were like, "What's going to happen now?"
08:38 Now they're working directly with the company.
08:39 They traded it up to an all time high in the free market.
08:42 It is pulling back here.
08:44 I think if we just take that and look though, too, at all these stocks, I mean, these companies
08:50 are still going to be the driver for the next bull market.
08:53 And that's where people are positioning.
08:55 That's why people are paying extremely rich valuations for Microsoft and for Apple and
09:00 always for Amazon.
09:01 And Google's valuation is starting to become higher as well.
09:05 I mean, people are paying up in Nvidia, including myself.
09:09 I mean, people are paying high valuations for these companies because they believe that
09:13 these companies are the ones that are going to drive the next bull market when it comes.
09:17 And some people think the next bull market is coming sooner than later.