Listen on the go! A daily podcast of Wall Street Breakfast will be available by 8:00 a.m. on Seeking Alpha, iTunes, Spotify.
Getty Images
Structurally speaking
Control over one of the biggest players in artificial intelligence keeps getting shuffled around, with OpenAI reshaping its corporate structure (again). It's a big deal, as OpenAI is one of the highest privately backed companies in the world and has been facing a notable lawsuit from founder Elon Musk (who sued to block the last conversion and now leads competitor xAI). Microsoft (MSFT) also holds a large stake in OpenAI, which announced plans in March to raise up to $40B at a $300B valuation.
Backdrop: Since its founding in 2015, OpenAI's mission has been to develop cutting-edge AI technologies that would "benefit humanity as a whole, unconstrained by a need to generate financial return." Only a few years later, the non-profit formed a "capped profit" subsidiary, which eventually helped it attract the billions of dollars in investment that were needed to develop its large language models, ChatGPT, and other expensive generative AI offerings. A schism eventually grew between the OpenAI board skeptical of corporate expansion and CEO Sam Altman's business vision, leading to the latter's rapid ouster and subsequent reinstatement in 2023 following an employee revolt.
That wasn't the end. OpenAI led by Altman later decided to spin off the non-profit division and convert itself into a for-profit firm, before settling on a "public benefit corporation," which would combine profit-making with social goals. AI safety concerns still lingered, prompting the company to take yet another turn. According to the newest structure, the non-profit will maintain oversight and retain a large ownership stake in the new public benefit corporation. The move was said to be decided upon after "hearing from civic leaders" and "engaging in dialog with AGs in Delaware and California" who had to sign off on the process.
Sounds complicated? It is. The new structure means the public benefit corporation will have "non-profit control," though questions remain about the level of authority, while communications surrounding the move didn't provide too many more details. "I won't pretend that it wouldn’t maybe be easier if we were a fully normal company, but the mission comes first," Altman declared. "We believe this is well over the bar of what we need to be able to fundraise… The nonprofit will continue to control the PBC, and will become a big shareholder in the PBC, in an amount supported by independent financial advisors."
What else is happening...
WSB survey results: Here is Warren Buffett's best investment.
Waymo (GOOGL) to expand fleet; Google sets sights on Hollywood.
Going private: Skechers (SKX) to be sold to 3G Capital.
More M&A as DoorDash buys U.K. peer Deliveroo for $3.9B.
Ford (F) pulls guidance; Palantir (PLTR) stumbles after earnings.
Latest executive order to streamline domestic drug production.
State AGs sue to block Trump's suspension of wind projects.
Radar failure left Newark air-traffic staff blind for 90 seconds.
U.S. government blocks future federal grants for Harvard.
Chevron (CVX) CEO warns against losing ties with Venezuela.
Here's the latest Seeking Alpha analysis
The Only 2 Investments You Need To Retire
What Recession? I'm Swimming In Dividends
How To Profit From What Might Be The Craziest Year In Stock Market History
Today's Markets
In Asia, Japan closed. Hong Kong +0.7%. China +1.1%. India -0.2%.
In Europe, at midday, London -0.1%. Paris -0.5%. Frankfurt -0.9%.
Futures at 7:00, Dow -0.5%. S&P -0.6%. Nasdaq -0.9%. Crude +2.1% to $58.35. Gold +2% to $3,388.80. Bitcoin -0.2% to $94,025.
Ten-year Treasury Yield +1 bp to 4.35%.
On The Calendar
Companies reporting today include Advanced Micro Devices (AMD) and Super Micro Computer (SMCI).
See the full earnings calendar on Seeking Alpha, as well as today's economic calendar.
