OpenAI upheaval triggers new all-time high in MSFT

Investors in Microsoft were on edge this weekend as Sam Altman, the CEO of OpenAI, was let go. Greg Brockman, another OpenAI co-founder and a key player at Open AI, opted to leave following the news.

The decision stirred unease among Microsoft's investors, as the potential for Altman and Brockman to establish a competitor to OpenAI loomed. Such a development could diminish the benefits of the OpenAI/Microsoft collaboration, into which Microsoft had invested a substantial $13 billion. This investment was seen as a strategic move to secure a competitive edge, and a rival venture by OpenAI's founders might undermine this advantage.

As the dust settled, Altman and Brockman decided to join Microsoft to spearhead their new AI division instead of setting up a new firm, a move that will likely contain the damage made by the OpenAI board.

And, as time passed, an open letter from other OpenAI staff hinted at further luck for Microsoft as up to 80% of OpenAI's staff said they were ready to quit if Altman was not reinstated and the board that fired him removed. If the team would leave OpenAI and join Microsoft, it would be a big win for Microsoft.

On the other hand, many apps and businesses that rely on OpenAI, would likely come under pressure as a potential collapse of OpenAI could leave many in a tough spot.

Even before last week's turmoil, Microsoft's stock was climbing. This rise isn't surprising. Tools like ChatGPT significantly reduce work hours for office workers and while Microsoft doesn't directly profit from ChatGPT, it benefits indirectly. More of its products integrate ChatGPT's underlying technology, saving clients time and money.

From a technical perspective, MSFT triggered a cup and handle pattern at the start of November. The pattern suggests MSFT could reach as high as 485 USD per share. Per the RSI 14 of the weekly chart, that has boded well in the last couple of years but does not rule out a short-term correction. The Cup and handle pattern will remain in play as the price trades above the October 30 low of $332.

MSFT Weekly Chart