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Semafor reported yesterday that Microsoft (NASDAQ:MSFT) is reportedly preparing to invest $10 billion in ChatGPT owner OpenAI, a deal that values the artificial intelligence (AI) business at $29B.
According to the report, the tech giant will get a 75% share of OpenAI’s profits until it makes back the money on its investment, after which Microsoft will get a 49% stake.
Wedbush analysts believe such a deal could prove to be a game-changer.
“With ChatGPT being one of the most innovative AI technologies seen in the industry, MSFT is clearly being aggressive on this front and not going to be left behind,” they told clients in a note.
The analysts also reminded investors that the AI arms race is taking place globally with Microsoft battling to become “a core AI play.” This view is also shared by MKM Partners analysts, who argue that an accelerating Big Tech AI War is set to take place in 2023.
“Microsoft Azure is the exclusive cloud provider for OpenAI, and a closer relationship with the golden child of AI apps could accelerate Azure’s infrastructure innovations, likely indirectly affecting market share trends vs. AWS and GCP,” the analysts wrote in a note.
