Holy cow, it’s been one of the most extraordinary weekends of my career.
I rewrote this whole issue of The Jolt at 1 a.m. because of the big news.
In case you missed it, OpenAI (the company behind ChatGPT) fired its CEO Sam Altman on Friday evening.
I’ve been working all weekend watching this coup play out.
I’m dedicating today’s Jolt to answering the questions on everyone’s mind: Why was Altman fired… what does it mean for AI (does it slow it down?)… and, most importantly, what does this mean for AI investors?
First, an important reminder: Tomorrow is finally the big day. I’m getting on camera to share my whole AI portfolio—five stocks to buy and five to avoid.
If you missed last week’s early bird ticket window, it’s not too late. Go here to get your ticket.
The ticket window closes at midnight TONIGHT, and we go “live” at 8 p.m. EST tomorrow.
Let’s get after it!
- Why was Sam Altman fired?
There’s a group of people who think AI is going to go rogue and wipe out humanity. We've made fun of these “doomers” before.
My take: These folks need to lay off the Terminator movies. AI will save millions of lives before it kills anyone.
Unfortunately, a couple of these doomers helped found OpenAI and sit on its board of directors.
Their #1 concern above all else is creating “safe” AI.
They were extremely concerned that OpenAI was moving too fast. They didn’t like that Sam Altman was raising money from the likes of Microsoft (MSFT) and moving full steam ahead on AI.
So, they launched a coup and ousted him.
According to leading tech outlet The Information, employees were told removing Altman was the “only path” to achieving the company’s mission of “broadly beneficial” AI.
The new CEO of OpenAI, Emmett Shear, has called for an AI pause.
- What does this mean for OpenAI?
Last week, a top AI researcher told me, “OpenAI is kicking everyone’s ass on AI.”
OpenAI was weeks away from raising money at an $80 billion valuation, cementing itself as the most important company of the next decade.
I didn’t have OpenAI blowing its seemingly insurmountable AI lead on my bingo card… but that’s what just happened.
When Sam Altman got fired, several key people walked out in disgust. Now I’m hearing dozens of employees are also resigning.
Leaders matter. OpenAI is nothing without its people.
It will lose 50% of its employees and 90% of its valuation in the next year.
Given the move it just pulled, who’s going to invest in OpenAI ever again?
Way to snatch defeat from the jaws of victory, guys.
- Does this mean AI development is grinding to a halt?
No! It will do the total opposite… speed it up.
Suddenly, AI is a multi-way race. A Cambrian explosion of AI competitors will spring up as a result of OpenAI’s demise. It’s a great day for American tech.
When Sam Altman led OpenAI, he had to pander to the “doomers” who wanted to slow AI development down.
All the top talent will exit OpenAI. These folks—including Altman—will start new AI ventures unencumbered by this bizarre idea that AI is going to wipe out humanity.
Full steam ahead on AI development! It’s like someone just hit the “turbo boost” button on AI.
I am FAR more bullish on AI after this weekend’s drama.
- Who is the biggest winner from the breakup of OpenAI?
Microsoft.
You may know Microsoft owns 49% of OpenAI. It’s invested billions of dollars into the AI startup and practically bet its own future on artificial intelligence.
At first, this weekend’s shenanigans looked terrible for Microsoft. I expected the stock to drop 10% or so this morning.
But then CEO Satya Nadella pulled off a move ensuring he’ll go down in the CEO “hall of fame.”
He announced Sam Altman—along with several former key employees from OpenAI—will join Microsoft to lead a new advanced AI research team!
We just witnessed one of the greatest moves in business history. Books will be written about this deal.
Microsoft just basically acquired OpenAI for free. What a masterclass!
In time, this could add $1 trillion to Microsoft’s market cap.
Microsoft is still the only big tech stock I’d want to own.
- Okay… so what happens now?
Sam Altman and Co. have been given free rein to remake OpenAI within Microsoft…
This new venture is equipped with limitless amounts of money and computer chips.
As a public company that must answer to shareholders, Microsoft is incentivized to develop AI as fast as possible.
Sam will poach top talent from OpenAI and build the “next” ChatGPT (GPT-5) so fast, it’ll make your head spin.
Oh, and get this: OpenAI rents its computing resources through Microsoft’s “cloud.”
I bet Microsoft will restrict its access, like a boa constrictor suffocating prey.
- What does all this drama mean for AI investors?
Bullish.
It speeds up AI deployment and spending.
The biggest winner is, yet again… Nvidia (NVDA).
Microsoft is one of Nvidia’s largest customers. The software giant plans to spend $50 billion building out datacenters in 2024 alone!
A big chunk of that will be spent on Nvidia’s AI chips. (I expect Nvidia to crush earnings tomorrow and hit new record highs.)
We’re slap bang in the middle of the AI infrastructure buildout. We ran the numbers and found this is one of the largest—if not the largest—infrastructure buildouts in history.
Don’t you want to invest in that? I sure do.
That’s why two of the five AI stocks I’ll recommend at tomorrow night’s AI event are AI infrastructure plays.
What a weekend!
Hope to see you in the online audience tomorrow at our AI event (get your last-chance ticket here).
Otherwise, I’ll talk to you Wednesday.
Stephen McBride
Chief Analyst, RiskHedge
