Microsoft the Now AI Powerhouse
With the news that Microsoft has hired Sam Altman and Greg Brockman, after the absolute debacle that has been Open AI over the past few days, Microsoft has now emerged as the most powerful force in AI.
- Microsoft is now in position to not be depending on an outside source for a critical piece of their AI stack
- This new division led by Sam Altman and Greg Brockman is likely the most important to the future of Microsoft
- Microsoft’s efforts in custom silicon got even more interesting from a point of differentiation
From a strategic standpoint, this is a huge win for Microsoft. From the very beginning of Microsoft’s relationship with OpenAI and how Microsoft was deeply partnering with the company, we always thought an acquisition made sense but would be difficult to pass regulatory scrutiny. Owning OpenAI, and specifically the ChatGPT foundational model, would put Microsoft in a position to own one of the most critical parts of the AI stack. Despite the massive amount of investment and close relationship with Sam Altman and Satya Nadella, there was clearly still risk associated with relying on a third party for a critical part of your AI stack. That risk was made more evident with the shakeup at OpenAI over the weekend.
Many wondered how investors and partners like Microsoft could have made such a big bet on a company with such a shaky governance structure. The only explanation was Sam Altman; those investors and partners were investing and partnering and betting on Sam.
In our view, most strategic concerns are quelled as Sam Altman and Greg Brockman are now leading a new division at Microsoft that is likely the most important division for Micrsosoft’s future. Recent news also suggests a good portion of the Open AI employees are also likely to join this division at Microsoft. Meaning, that Microsoft has now essentially acquired OpenAI with zero money down and no regulatory issues.
Our note last week around the news from Ignite emphasized Microsoft’s desire to go full-stack AI. The missing piece was owning their own foundational model. This move makes that path clear, and Microsoft’s ability to truly go full-stack AI is now in place.
For now, Microsoft will still need to collaborate with OpenAI, given the tight integration with Azure and into parts of Windows and Office 365. But, we fully expect this move to mean Microsoft transitions away from OpenAI and moves to their foundational model, which could take up to a year, we are told from experts in the field we have spoken with.
Lastly, this move has made Microsoft’s efforts in custom silicon, announced last week, even more interesting. There were rumors Sam Altman had been discussing raising additional capital to create silicon that could eliminate the dependence on Nvidia. While that alone is a monumental task, Microsoft’s Maia custom accelerator, which Sam Altman aided with, could take that path going forward. The unique angle here is the ability to develop a foundational model deeply tied to silicon architecture for training and inference. The implications of this are extremely intriguing and could only help deepen Microsoft’s differentiation here as a truly full-stack AI company.