Microsoft’s (MSFT) shares edged higher on Monday morning despite an internal memo seen by CNBC that notes that the tech giant’s key partnership with OpenAI “has also limited” the startup’s ability to scale its enterprise client base.
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New trading tool for AMZN bullsOpenAI Praises Amazon Tie-Up
In the memo, Denise Dresser, the new chief revenue officer at OpenAI, said many customers wanted access to Bedrock, Amazon’s (AMZN) fully managed service for generative AI. The service provides customers with access to leading AI models from various companies.
Dresser hailed the startup’s tie-up with Amazon as a boost for the company’s push to attract more enterprise clients.
The executive’s comment comes over two months after reports emerged that Amazon (AMZN) was looking to pump up to $50 billion in investment into OpenAI. Dresser said the startup has been seeing “frankly staggering” enterprise customer demand following the deal.
However, the move has irked Microsoft (MSFT), OpenAI’s biggest backer and key cloud rival to Amazon. The tech giant is now reportedly considering legal action against both companies.
OpenAI-Microsoft Relationship Faces Friction
Microsoft is a longstanding partner to OpenAI, backing the startup from its early days before it became known as the maker of the hugely popular AI chatbot, ChatGPT. The Silicon Valley company has committed over $13 billion in investments in OpenAI since 2019 and recently took a 27% stake — about $135 billion stake — in the company.
However, OpenAI appears to be looking to reduce its reliance on Microsoft and its Azure cloud services, even as rival Anthropic’s Claude AI model continues to garner wide industry attention. Microsoft is also weaning itself off reliance on OpenAI and recently launched the Copilot Cowork AI tool based on Anthropic’s Claude Cowork.
Is Microsoft a Buy or Sell Today?
On Wall Street, Microsoft’s shares remain a Strong Buy based on analysts’ consensus rating. This breaks down into 35 Buys and three Holds issued by 38 analysts over the past three months.
In addition, the average MSFT price target of $580.84 implies about 54% upside from current trading levels.
