AI Daily: OpenAI strikes new deal with Microsoft

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:

OPENAI, MICROSOFT NEW AGREEMENT: In a post to its corporate news site, OpenAI stated, “Since 2019, Microsoft and OpenAI have shared a vision to advance artificial intelligence responsibly and make its benefits broadly accessible. What began as an investment in a research organization has grown into one of the most successful partnerships in our industry. As we enter the next phase of this partnership, we’ve signed a new definitive agreement that builds on our foundation, strengthens our partnership, and sets the stage for long-term success for both organizations. First, Microsoft supports the OpenAI board moving forward with formation of a public benefit corporation and recapitalization. Following the recapitalization, Microsoft holds an investment in OpenAI Group PBC valued at approximately $135B, representing roughly 27% on an as-converted diluted basis, inclusive of all owners-employees, investors, and the OpenAI Foundation. Excluding the impact of OpenAI’s recent funding rounds, Microsoft held a 32.5% stake on an as-converted basis in the OpenAI for-profit. The agreement preserves key elements that have fueled this successful partnership-meaning OpenAI remains Microsoft’s frontier model partner and Microsoft continues to have exclusive IP rights and Azure API exclusivity until Artificial General Intelligence. It also refines and adds new provisions that enable each company to independently continue advancing innovation and growth… As we step into this next chapter of our partnership, both companies are better positioned than ever to continue building great products that meet real-world needs, and create new opportunity for everyone and every business.”

Evercore ISI highlights that updated details of Microsoft’s relationship with OpenAI include the fact that the company will own an approximately 27% stake, worth about $135B, which the firm estimates would equate to about $18 per share in value. OpenAI remains Microsoft’s frontier model partner and Microsoft continues to have exclusive IP rights and Azure API exclusivity until Artificial General Intelligence. In addition, OpenAI has contracted to purchase an incremental $250B of Azure services, though Microsoft will no longer have a right of first refusal to be OpenAI’s compute provider. The firm, which expects to get a better understanding on how the change in this relationship and structure could impact the accounting around Microsoft’s investment on the earnings call tomorrow, views the updated pact removing an overhang for Microsoft and keeps an Outperform rating and $625 price target on the shares.

RECAPITALIZATION PLAN: California Attorney General Rob Bonta released the following statement on Microsoft (MSFT)-backed OpenAI’s recapitalization plan, “Over the last year and a half, my office has conducted a robust investigation into OpenAI’s initial plan to restructure, followed by its revised plan to recapitalize. This included extensive negotiations with OpenAI, and we secured concessions that ensure charitable assets are used for their intended purpose, safety will be prioritized, as well as a commitment that OpenAI will remain right here in California. With these important concessions in place, we will not be in court opposing OpenAI’s recapitalization plan. And now, we look to the future. California companies can grow and thrive AND protect our people at the same time. As the Attorney General, my top priority is, and will always be, protecting our kids. We will be keeping a close eye on OpenAI to ensure ongoing adherence to its charitable mission and the protection of the safety of all Californians.”

PAYPAL, OPENAI PARTNERSHIP: PayPal (PYPL) announced it will adopt the Agentic Commerce Protocol to expand payments and commerce in ChatGPT. Millions of ChatGPT users will be able to check out instantly using PayPal, and PayPal will support payments processing for merchants leveraging OpenAI Instant Checkout. PayPal will also connect its global merchant network to OpenAI. PayPal will also support OpenAI Instant Checkout through the delegated payments API, managing payment processing for card payments.

PayPal launched agentic commerce services. Built upon PayPal’s payments infrastructure, identity verification, and buyer protection, its agentic commerce services are designed to enable the first wave of commerce capabilities for the emerging world of AI-driven shopping. PayPal’s agentic commerce services will initially include an agentic payment solution, as well as a catalog and order management offering that helps merchants connect product data, inventory, and fulfillment with AI-driven discovery and checkout experiences.

NOKIA STAKE: Nokia (NOK) said its board has resolved to issue 166.4M new shares in a directed share issuance to enable Nvidia (NVDA) to make a $1B equity investment in Nokia. Nvidia will subscribe for the shares at a subscription price of $6.01 per share. The transaction will see Nvidia become a 2.90% shareholder of Nokia. “The strategic partnership and investment are expected to create significant value for both companies. Nokia will use the proceeds from the issuance to accelerate its strategic plans to advance trusted connectivity for the AI supercycle and other general corporate purposes. Nokia intends to accelerate development of Nokia’s 5G & 6G RAN software to run on NVIDIA’s architecture and will make investments to drive Nokia’s strategic goal of increasing its presence in the AI & Cloud market with data center aligned networking solutions within its Network Infrastructure business. Nokia and NVIDIA have agreed to collaborate on AI networking solutions and explore opportunities to incorporate Nokia’s data center switching and optical technologies in NVIDIA’s future AI infrastructure architecture,” Nokia said in a statement.

NVIDIA, PALANTIR COLLABORATION: At GTC Washington, Nvidia (NVDA) announced a collaboration with Palantir Technologies (PLTR) to build “a first-of-its-kind integrated technology stack for operational AI – including analytics capabilities, reference workflows, automation features and customizable, specialized AI agents – to accelerate and optimize complex enterprise and government systems.” Nvidia stated, “Palantir Ontology, at the core of the Palantir AI Platform, will integrate NVIDIA GPU-accelerated data processing and route optimization libraries, open models and accelerated computing. This combination of Ontology and NVIDIA AI will support customers by providing the advanced, context-aware reasoning necessary for operational AI. Enterprises using the customizable technology stack will be able to tap into their data to power domain-specific automations and AI agents for the sophisticated operating environments of retailers, healthcare providers, financial services and the public sector.” Jensen Huang, founder and CEO of Nvidia, added: “Palantir and NVIDIA share a vision: to put AI into action, turning enterprise data into decision intelligence. By combining Palantir’s powerful AI-driven platform with NVIDIA CUDA-X accelerated computing and Nemotron open AI models, we’re creating a next-generation engine to fuel AI-specialized applications and agents that run the world’s most complex industrial and operational pipelines.”

AI SUPERCOMPUTER: Nvidia announced that it is working with the U.S. Department of Energy’s national labs and the nation’s leading companies to build America’s AI infrastructure to support scientific discovery, economic growth and power the next industrial revolution. “We are at the dawn of the AI industrial revolution that will define the future of every industry and nation,” said Jensen Huang, founder and CEO of Nvidia. “It is imperative that America lead the race to the future – this is our generation’s Apollo moment. The next wave of inventions, discoveries and progress will be determined by our nation’s ability to scale AI infrastructure. Together with our partners, we are building the most advanced AI infrastructure ever created, ensuring that America has the foundation for a prosperous future, and that the world’s AI runs on American innovation, openness and collaboration, for the benefit of all.” Nvidia is accelerating seven new systems by providing the AI infrastructure to drive scientific research and innovation at two U.S. Department of Energy facilities – Argonne National Laboratory and Los Alamos National Laboratory. Nvidia is collaborating with Oracle (ORCL) and the DOE to build the U.S. Department of Energy’s largest AI supercomputer for scientific discovery. The Solstice system will feature 100,000 Nvidia Blackwell GPUs and support the DOE’s mission of developing AI capabilities to drive technological leadership across U.S. security, science and energy applications. Another system, Equinox, will include 10,000 Nvidia Blackwell GPUs expected to be available in 2026. Both systems will be located at Argonne, and will be interconnected by Nvidia networking and deliver a combined 2,200 exaflops of AI performance. Argonne is also unveiling three powerful Nvidia-based systems – Tara, Minerva and Janus – set to expand access to AI driven computing for researchers across the country.

AGENTIC AI CAPABILITIES: Ingram Micro (INGM) announced the first enterprise-grade AI Agent built within its patented Ingram Micro Xvantage AI Factory, using Google’s (GOOGL) Gemini large language models. This new agent, known as the Sales Briefing Assistant, marks the company’s first production release of an AI agent built using Gemini models.