Microsoft’s investment in the developer of ChatGPT may be the smartest $1 billion investment ever made

If ChatGPT realizes its potential, Microsoft may have future-proofed its cloud and browser business forever  

For the past few months, it has looked like Big Tech’s bull run is coming to an end. As interest rates soar, even well-funded tech companies are retreating from risky, expensive moonshots or money-losing projects. But a speculative bet is increasingly looking like excellent value for money: OpenAI just  released AI bot ChatGPT and is in talks to raise $30 billion in capital.

In 2019, Microsoft invested $1 billion in buoyant artificial intelligence research firm OpenAI, co-founded by Y Combinator’s Sam Altman, Elon Musk, and a group of others just over seven years ago. Financial details of the deal weren’t disclosed at the time, but MIT Tech Review reported in 2020 that the $1 billion was split between cash and credit for Azure, Microsoft’s cloud business. In November, OpenAI released an easy-to-use bot, ChatGPT, based on its GPT 3.5 language model trained on Azure. Engineers, academics, entrepreneurs, non-techies, and investors were nearly universal in their hype and praise as ChatGPT proved (up to a point) to be frighteningly intelligent. Even when buggy, ChatGPT is so smart that Google considers the chatbot “Code Red” for its search business.

Now, OpenAI is reportedly in talks to raise more capital at a valuation of nearly $30 billion – up from a current valuation of $20 billion – and is reportedly in talks with the VC led by Peter Thiel -Company Founders Fund. The valuation would be cemented by a takeover bid with the sale of existing shares to investors. The Information reported that the company could integrate ChatGPT with Bing, its struggling Google competitor. The first real threat to Google’s search hegemony in two decades.

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