What Happened:
Shares of artificial intelligence (AI) software company C3.ai (NYSE:AI) jumped 5.9% in the morning session after the shocking news that OpenAI's CEO Sam Altman is leaving the company. According to the Board, Altman's departure "follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities. The board no longer has confidence in his ability to continue leading OpenAI." As a result, President and co-founder Greg Brockman announced that he's quitting OpenAI. Subsequently, Microsoft CEO Satya Nadella revealed that Altman and his former OpenAI co-founder, Greg Brockman, are joining Microsoft to lead a new advanced AI research team. This move signals Microsoft's commitment to leading the rapidly growing AI market. The combination of Altman and Brockman's expertise with Microsoft's vast resources could create a formidable force in the AI space. This development shows that AI platforms like C3.ai could be potential acquisition targets of larger tech and internet companies that want to quickly add AI capabilities and talent.
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What is the market telling us:
C3.ai's shares are very volatile and over the last year have had 74 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago, when the company dropped 14.4% on the news that short seller, Sahm Adrangi of Kerrisdale Capital, sent a letter to Deloitte & Touche, conveying worries about alleged accounting problems at the firm.
C3.ai is up 184% since the beginning of the year, but at $31.53 per share it is still trading 32% below its 52-week high of $46.37 from June 2023. Investors who bought $1,000 worth of C3.ai's shares at the IPO in December 2020 would now be looking at an investment worth $340.12.
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