After months of considering a shift to a for-profit structure, Microsoft-backed OpenAI (MSFT) has decided to stick with its current model. On Monday, the company announced that its nonprofit arm will continue to control operations, which include the development of ChatGPT and other AI products. CEO Sam Altman explained in a letter to employees that this decision came after discussions with civic leaders and consultations with the Attorneys General of California and Delaware, who were concerned about the change.
OpenAI’s nonprofit board, led by chair Bret Taylor, also confirmed this decision. Although OpenAI already has a for-profit arm, Taylor explained that it will now be converted into a public benefit corporation. This means that it must focus on both making profits and staying loyal to OpenAI’s mission. It is worth noting that OpenAI was founded nearly a decade ago in order to safely develop artificial general intelligence for the good of humanity and has grown significantly since then. In fact, it is now valued at $300 billion, and its ChatGPT platform has over 400 million weekly users.
Interestingly, several challenges influenced the firm’s decision to become a public benefit corporation. Indeed, OpenAI is currently facing a lawsuit from co-founder and Tesla (TSLA) CEO Elon Musk, who is accusing the company of abandoning its original nonprofit goals. Some of Musk’s claims were dismissed, but others will go to trial next year. Additionally, the Attorneys General in Delaware, where OpenAI is incorporated, and California, where it is based, have been closely watching the company’s governance plans and could potentially step in if they disagree with OpenAI’s plans.
Is MSFT Stock a Buy?
Although you cannot directly invest in OpenAI, you can buy shares of Microsoft, which has a 49% stake in OpenAI. And according to analysts, Microsoft stock has a Strong Buy consensus rating among 34 Wall Street analysts. That rating is based on 29 Buys and five Holds assigned in the last three months. Furthermore, the average MSFT price target of $506.31 implies 16% upside potential.
