Microsoft Corp's (MSFT  ) hiring of Sam Altman just days after the 38-year-old entrepreneur was fired by OpenAI has inspired analysts to examine the Redmond, Washington-based tech giant's position in the artificial intelligence (AI) sector.

  • Piper Sandler analyst Brent A. Bracelin reiterated an Overweight rating on Microsoft with a price target of $425.
  • Mizuho analyst Gregg Moskowitz reiterated a Buy rating on Microsoft with a price target of $420.
Timelines for new technology to reach mass adoption (~500 million+ user milestone) have historically been measured in decades or more recently in years. That was, until the advent of ChatGPT powered by OpenAI, which became the lightning rod for the generative AI revolution now underway.

Bracelin sees the hiring of Altman and his fellow OpenAI co-founder, Greg Brockman, as a bold but necessary move (even if temporary).

It could better position Microsoft to control its own AI destiny. It also reinforces the longer-term aspiration to build an end-to-end AI stack.

Bracelin projects second-quarter (Q2) revenue and EPS of $61.16 billion (consensus $61.12 billion) and $2.75 (consensus $2.78).

Moskowitz projects Q2 revenue and EPS of $60.97 billion and $2.75.

For OpenAI, unfortunately, this situation currently appears to be heading toward one of the most rapid and remarkable cases of value destruction in the history of software, one analyst noted. There is now some uncertainty over its future. Altman and Brockman had evidently considered starting an AI venture only two days ago.

More broadly, notwithstanding a more challenging operating environment, Microsoft's growth opportunities over the medium term and beyond are more remarkable than many realize, one analyst notes.

Price Action: MSFT shares traded lower by 0.83% at $374.31 premarket on the last check Tuesday.