Microsoft-backed (MSFT) AI firm OpenAI recently released its first open-weight large language models since 2019, which was a big move in response to the growing competition from China’s DeepSeek. Indeed, DeepSeek’s own open-weight model pushed OpenAI to change its approach after CEO Sam Altman admitted on Reddit that the company had been “on the wrong side of history” when it came to open-source AI. Unlike open-source models that also reveal their code and training data, open-weight models only give access to the weights, which are the internal settings that control how the AI responds. Interestingly, though, this release benefits OpenAI in several ways, according to The Information.
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The first benefit is that it earns the company credit with both developers and U.S. officials by offering a strong American-made alternative to Chinese models like DeepSeek-V3. In fact, many developers have already said that these new models match or even beat Chinese options while being smaller and easier to run. At the same time, this move puts pressure on rivals like Meta (META), which popularized open-weight models with its Llama series but disappointed with its most recent release. It also challenges other competitors like Anthropic and Google (GOOGL), whose models may now see less demand.
Furthermore, the launch is appealing to large companies that want to run AI entirely on their own servers for security reasons but have been hesitant to use Chinese technology. For these companies, having a high-quality OpenAI model available to run privately could be a major advantage and further strengthen OpenAI’s position in the market. However, the strategy does come with risks because the free models could cut into OpenAI’s revenue from older paid models. Still, OpenAI appears to be confident that its upcoming premium model, GPT-5, will be good enough to keep attracting paying customers.
Is MSFT Stock a Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 34 Buys and one Hold assigned in the last three months. In addition, the average MSFT price target of $624.17 per share implies 18.7% upside potential.
