Microsoft Stock (NASDAQ:MSFT)
According to a report from Semafor on Monday, citing sources familiar with the situation, Microsoft (NASDAQ:MSFT) is reportedly discussing investing $10 billion into OpenAI, the company that owns ChatGPT. This would give the San Francisco-based company a valuation of $29 billion. As a result, Microsoft stock surged.
According to the article, the cash comes from various venture capital companies. In recent weeks, transaction paperwork has been sent to potential investors to complete the investment round by the end of 2022.
Microsoft did not want to comment on the matter, and OpenAI did not immediately reply to a request for comment from Reuters.
This comes after a report in the Wall Street Journal stated that OpenAI was in discussions to sell existing shares at a valuation of approximately $29 billion. The report stated that venture capital firms such as Thrive Capital and Founders Fund were interested in purchasing shares from existing shareholders.
The ChatGPT chatbot was made available for free public testing on November 30 by OpenAI, created by Elon Musk, the CEO of Tesla (NASDAQ:TSLA), Inc., and investor Sam Altman. A software program called a chatbot is an application meant to simulate human communication in response to input from the user.
According to the Semafor article, the financing conditions include that Microsoft will get 75% of OpenAI’s income until it recoups its original investment. This will occur after OpenAI discovers a way to monetize ChatGPT and its other products, such as the picture production tool Dall-E.
According to the report, once that benchmark was reached, Microsoft would have a 49% stake in OpenAI, with other investors taking another 49% and OpenAI’s nonprofit parent getting 2%. However, the report clarified the stakes when Microsoft got its money back, so it was unclear what those stakes would be until Microsoft got its money back.
According to a story published a week ago in the Information, Microsoft, which made a one billion dollar investment in OpenAI in 2019, was working on launching a version of its search engine Bing that would use the AI that is behind ChatGPT.
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