This month’s OpenAI drama has largely come and gone, but OpenAI management will feel the repercussions for a while. Just weeks before the boardroom coup and subsequent Reverse Uno, OpenAI management was juggling options to let employees cash out shares in a move valued at more than $80 billion. The tender seems as though it’s back on track. We don’t know whether the final valuation matches the pre-OpenAI drama figure.
One thing is certain, though. Shareholders, public and private, hate drama. They hate uncertainty. They hate dysfunctional management, executives, and boards. And, though Altman and company are assuring everyone that the OpenAI drama was a mere stumbling block, injecting that degree of uncertainty into a company’s operations is liable to spook investors.
Of course, plenty of companies can take advantage of OpenAI’s management mishap. Unlike shareholders, these companies see OpenAI drama like sharks see blood in the water – as a feeding frenzy opportunity.
Microsoft (NASDAQ:MSFT) has the most to lose from OpenAI drama but, paradoxically, the most to gain. The firm holds “just” 49% of OpenAI with terms largely preferential to Altman and the team. Still, Microsoft could lose a small fortune if the OpenAI drama pushes investors toward other generative AI operations or if the company completely collapses.
But, as we saw in the immediate wake of Altman’s ouster, Microsoft could easily execute their own coup. Management proved willing to bring Altman and (likely) a bulk of OpenAI’s workforce under their umbrella. Days after the firing, Microsoft CEO Satya Nadella hired Altman and his co-founder to create an in-house AI workshop at Microsoft. That didn’t pan out as Altman returned to OpenAI. Still, it proves an important point. Microsoft has a solid relationship with the workhorses at OpenAI. Any further friction could send engineers and management running for Satya’s open arms.
The downside is that, though OpenAI runs most of its computing power on the back of Microsoft hardware, starting a new AI operation (almost) from scratch would put a theoretical Altman-led Microsoft team far behind the current competitive curve. Still, snagging OpenAI’s backbone would be a major win for Microsoft and one they’ve already proven able and ready to execute.
Alphabet (GOOGL, GOOG)
Alphabet (NASDAQ:GOOGL, NASDAQ:GOOG) is having drama of its own amid an ongoing antitrust battle that experts expect the Department of Justice to win ultimately. Still, uncertainty at OpenAI opens the door for Google’s AI initiatives to take center stage as we enter 2024. Specifically, Google could surge if predictions that the company’s AI tool “Gemini” will drop in 2024 hold.
Gemini will compete directly with OpenAI’s ChatGPT platform. It’s coming at just the right time, too. Not only is OpenAI embroiled in drama, but ChatGPT users are increasingly complaining that even the platform’s advanced features are increasingly unhelpful. Whether that’s due to compute power throttling, model hallucinations, or other technical trouble. What’s evident, though, is that Google is positioned to snatch OpenAI market share at the perfect intersection between user displeasure and shareholder uncertainty.
Suppose Google can accelerate its Gemini launch, which is already delayed from a planned 2023 release. In that case, it can also take advantage of holiday (lack of) inertia at OpenAI and other competitors and ultimately capture a slim lead.
Of course, we can’t cover major tech stocks racing towards AI goals without mentioning Amazon (NASDAQ:AMZN). Like Google, Amazon gains a competitive edge when users and shareholders flock to alternatives amid OpenAI drama. But, though Amazon’s in-house AI tools are limited (at best) to summarizing product reviews on the retail platform, Amazon stands to gain from competitors flooding the space as OpenAI leaves a discernable gap.
Amazon’s web service platform, AWS, is one of the few stacks secure and large enough to handle many users’ worth of AI solutions and tools. To that end, AWS’ more than 100,000 can leverage the service to develop their own bespoke generative AI tools custom-fit to their operational needs. The implications for this are staggering. As AI becomes more easily accessible from a user experience perspective, companies will increasingly sell “DIY AI” packages – likely hosted on AWS.
So, no matter how the OpenAI drama shakes out or who wins the ultimate race to general artificial intelligence, Amazon sells the proverbial picks and shovels to a legion of gold miners.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.