AI Daily: Microsoft, OpenAI rewriting terms of partnership

Catch up on the top artificial intelligence news and commentary by Wall Street analysts on publicly traded companies in the space with this daily recap compiled by The Fly:

NEW TERMS OF PARTNERSHIP: OpenAI and Microsoft (MSFT) are rewriting the terms of their partnership in a negotiation made to allow OpenAI to launch a future initial public offering while protecting Microsoft’s access to its AI models, George Hammond, Stephen Morris, Cristina Criddle, and Melissa Heikkila of The Financial Times report. Microsoft is offering to give up some of its equity stake in OpenAI’s new for-profit business in exchange for accessing new technology beyond the original deal’s 2030 cut off, three people with direct knowledge of the discussions said.

NEW FUNDING ROUND: Perplexity is in advanced talks to raise $500M in a round that values it at $14B, according to people familiar with the matter, a sign of increased investor excitement about AI’s potential to challenge Google’s (GOOGL) longstanding dominance over search, The Wall Street Journal’s Berber Jin reports. The venture firm Accel is set to lead the round, people familiar with the matter said. It is one of a set of startups that have grown quickly after the launch of OpenAI’s ChatGPT three years ago.

TARGET RAISE: BofA raised the firm’s price target on Palantir (PLTR) to $150 from $125 and keeps a Buy rating on the shares. Companies continue to announce AI initiatives, product developments, and integrations, but “underneath the marketing and fanfare,” the AI tools are “often ChatGPT-wrappers,” the firm tells investors. Conversely, Palantir’s value is creating “outcome-focused bespoke AI-enabled products, at scale,” argues BofA, which adds that the speed and scale at which Palantir can deploy products and convert customers is growing. The firm views Defense and Commercial markets as both in the “infancy of unlocking real-value via AI.”

Barclays raised the firm’s price target on CoreWeave (CRWV) to $60 from $48 and keeps an Overweight rating on the shares. The firm sees upside to CoreWeave’s Q1 results on the back of a “derisked IPO model and ongoing healthy AI demand.” The quarter should provide investors “with another opportunity to address narrative overhangs while getting more comfortable with the business model,” Barclays tells investors in a research note.