Greg Morcroft

2023-01-11 04:44

US :MSFT

Microsoft (US:MSFT) is exploring a significant investment in OpenAI, the wildly popular ChatGPT app creator. The $10 billion deal, which includes contributions from other venture firms, would put OpenAI's valuation at a whopping $29 billion, the website Semafor reported on Tuesday.

As outlined, the deal would give Microsoft the majority of OpenAI's profits, 75%, until its investment is recouped. Once that happens, ownership would shift to a more standard 49% for Microsoft, 49% for other investors, and 2% for OpenAI's nonprofit parent. Additionally, a profit cap would be in place that varies depending on the investors.

It's worth noting that the deal's details and the investment amount may change, and the deal may not materialize. Neither Microsoft nor OpenAI have not commented yet.

In October, The Information reported that Microsoft had been in talks to expand its previous $1 billion investment in OpenAI.

While the negotiations and terms of the deal are still being discussed, the investment would be a significant step forward for Microsoft in  AI and a big boost for OpenAI and the technology behind ChatGPT. If the deal goes through, it will boost resources for OpenAI to continue developing and improving its technology and attract more talent. This news also suggests that Microsoft sees enormous potential in chatbot technology and believes it will become one of the major players in the AI industry. However, as with any business deal, there are always uncertainties, and the deal may fail. But if it does, it could set the stage for more innovative and exciting advancements in AI technology and chatbot applications.

If we look further into Microsoft data, we find an interesting deviation between insiders and fund sentiment for the stock.

Insider and fund sentiment are two different ways of measuring the sentiment surrounding a publicly traded company like Microsoft. Insider sentiment refers to the sentiment of company officers and insiders, while fund sentiment refers to the sentiment of institutional investors and funds.

Fintel, a financial data and analytics provider, tracks insider sentiment by monitoring company officers' and insiders' buying and selling activity. They gather information on insider transactions such as stock purchases and sales, options exercises and sales, and other forms of compensation such as salary, bonuses, and awards. By analyzing patterns in this data, they can determine whether insiders believe the company's stock is undervalued or overvalued.

Fund sentiment is measured by tracking institutional investors' and funds' buying and selling activity. Fintel gathers information on institutional trades such as purchases, sales, and short positions. By analyzing patterns in this data, they can determine whether these large investors believe the company's stock is undervalued or overvalued.

According to recent data from Fintel, insider sentiment for Microsoft is bullish, with company officers and insiders showing a net buying activity. This suggests that the company's officers and insiders believe the stock is undervalued and expect the stock price to rise.

However, fund sentiment for Microsoft is neutral, with institutional investors and funds showing a balanced level of buying and selling activity. This suggests that these large investors do not have a firm conviction in either direction regarding the stock's value.

It is worth noting that insider sentiment and fund sentiment are just two data points to consider when evaluating a stock. It's important to consider multiple data sources and analyses before making any investment decisions.

In summary, Microsoft's insider sentiment, as per Fintel, is bullish, while the fund sentiment is neutral. This means that company officers and insiders are more optimistic about the stock and expect it to rise in value, while institutional investors are more neutral in their positions.