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Where there is crisis, there is opportunity. And that’s certainly the case with the OpenAI saga going on right now.
Last weekend, OpenAI—the world’s leading AI startup—fell into a leadership crisis when the company’s board of directors ousted its CEO, sparking an employee revolt.
This crisis is messy. Some experts say it will reverse or even end the AI boom we’ve seen over the past year.
But we think that couldn’t be further from the truth.
Instead, we are confident that the OpenAI crisis will happen to significantly accelerate the AI Explosion over the next two years.
Breaking down the OpenAI Board Drama
The recent developments at OpenAI mark a critical inflection point to what I call Act II of the AI Explosion: A rapid and hugely successful “profit push” that will transform AI from a research concept into a series of world-changing products and services.
You know the headline developments.
- OpenAI’s board of directors suddenly fired CEO Sam Altman in a move no one saw coming – not even one Microsoft (MSFT), OpenAI’s largest investor and supporter.
- Employees and investors were outraged. Multiple OpenAI executives have announced their resignations. OpenAI’s investors, specifically Microsoft, were said to be furious. They spent the entire weekend leading negotiations to reinstate Sam Altman as CEO. The OpenAI management team assisted with those efforts.
- It seemed that such efforts would work – until late Sunday evening, when the OpenAI board shocked everyone again by announcing the hiring of the former CEO of Twitch to replace Altman.
- Microsoft responded by hiring Sam Altman and former OpenAI officials to lead a new advanced AI research team at Microsoft.
- About 700 of OpenAI’s 770 employees later signed a letter to OpenAI’s board essentially asking for the board’s resignation, or else they all leave to join Sam at Microsoft.
Needless to say, it was a wild weekend. And the saga is certainly not over. We think it’s likely that the board finally capitulates, they all resign, Sam officially returns as CEO of OpenAI, and a new board is established.
But what does all this mean for OpenAI, Microsoft and the AI Boom more broadly?
in short, nothing but very good things.
The OpenAI Crisis: A Critical Tipping Point for the AI boom
I know that may sound counterintuitive. How could all this chaos and outrage portend a bright future for AI stocks?
Because these developments confirm something crucial. Really powerful artificial intelligence – so-called “superintelligence” – is much closer than anyone thinks. And AI technology developments are advancing much faster than anyone thought possible.
In fact, it all comes back to the question: Why did the OpenAI board push Sam Altman out in the first place?
Because the company had just found a major AI breakthrough that was so powerful it scared some members of the board. – so much so that they wanted to blow up the company to stop that AI from getting out.
In an interview just last week — when he was still CEO of OpenAI — Altman said that sometime in early November, he was in the room when OpenAI made a major breakthrough that pushed the frontier of discovery. He called it only the fourth such major breakthrough in OpenAI’s eight-year history.
Presumably, this success was the proof of GPT-5 – the next evolution of OpenAI’s core AI technology.
Reports suggest that this demonstration of AI was so powerful that it created mixed feelings among the OpenAI board. Some, like Altman, were excited about the economic prospects of this new AI. Others feared its dangers.
It seems that internally, Altman and the board agreed to proceed cautiously with this new AI. But Sam’s excitement got the best of him, and over the next few weeks, he went on a huge fundraising tour pitching this new AI to major investors. The board became concerned that he was moving too quickly and fired him.
Many people get caught up in the boardroom drama – and I understand; this thing plays like a soap opera. But we’re more focused on the fact that all of this is happening because AI is advancing incredibly fast.
And it’s for sale in a big way.
AI Boom, Act II: The Profit Push
That brings us to our second big takeaway here: The “profit push” has begun.
OpenAI was a for-profit organization under the control of a non-profit parent organization. After the developments of this past weekend, it became clear that the non-profit parent organization was “holding back” the for-profit company from growing as quickly as possible in terms of new products and services.
Those unprofitable shackles are broken.
Whether Altman returns to OpenAI or not, the stage is set for a major for-profit push into next-gen AI over the coming months.
If he comes back, the board will definitely be fired. The non-profit organization will likely be delisted. And Microsoft is likely to make a check to put experienced business leaders with profit goals on the board. The result? New, refreshed OpenAI completely oriented towards profits.
If he doesn’t come back, all OpenAI talent will flock to Microsoft (again, about 90% of employees say they will leave). Microsoft will essentially rebuild OpenAI as a subsidiary of its company. And of course, that affiliate will be completely for-profit.
Either way, on its own or under the Microsoft umbrella, Sam Altman and team are about to make a huge push towards monetizing and commercializing their recent AI breakthrough.
Understanding the Broader Implications for the AI Industry
And that push is likely to move incredibly quickly. This past weekend, Sam Altman, Satya Nadella (Microsoft CEO), and the OpenAI management team were all very publicly disowned – not once, but twice.
And powerful people like that don’t take too kindly to being publicly embarrassed.
It’s my best guess that they’ll be moving fast, aggressively, and hard on their next AI pursuit.
Let’s also not forget: This does not happen in a vacuum.
Alphabet (GOOGLE) looks at all this. That’s how it is Meta (META), Amazon (AMZN), and every other AI company out there, both big and small.
They know this all started because OpenAI found some remarkable AI breakthrough. And they know that what follows is an aggressive push to commercialize and monetize that success.
So, if I’m Elon Musk, Mark Zuckerberg, or any top AI executive, what do I tell my team right now?
It’s “go time.” Either go hard, or lose this race to Satya and Sam.
And the same goes for investors.
This weekend’s developments have pushed us into Act II of the AI Boom – a rapid and hugely successful “profit push” that will transform AI from a concept into a series of world-changing products and services.
This is the time to make money in AI stocks.
The Final Word on OpenAI’s Change
And I am not alone in this thought.
Why else do you think Microsoft stock soared to all-time highs yesterday? Why else have the Global X Artificial Intelligence and Technology ETF (AIQ) surged to fresh highs of 2023?
The smart money sees the writing on the wall.
This is the beginning of the profitable gold rush in AI.
Frankly, I’ve never been more excited about the prospects of investing in AI stocks.
We have long held the belief that 2023 was just the beginning of a multi-year boom in AI stocks that will continue throughout this decade.
This weekend’s developments imply that 2024 and 2025 could be the best two years of that boom.
We couldn’t be more excited.
And in fact, we have the best way for you to play Act II of this explosion.
Find out how to prepare for life-changing gains.
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