OpenAI Shakeup: Company Ousts CEO Sam Altman, Microsoft Hires Him 11/20/23

SPEAKER_1 (0:00)

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David Faber (0:31)

Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (0:37)

Good Monday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer, David Faber at Post 9 of the New York Stock Exchange. Futures are mixed ahead of a holiday shortened week, but we're going to pack a lot in retail earnings, Nvidia, FOMC minutes, some flash PMIs, and of course, the whirlwind that is Microsoft OpenAI. Our roadmap begins with the Sam Altman saga. Abruptly ousted as the CEO, now hired at Microsoft to create a new advanced AI research team.

David Faber (1:02)

Plus big tech fueling this market rally. The Magnificent Seven Stocks all seen big gains over this month so far. Nvidia, by the way, surging more than 20%. It will be reporting very important results tomorrow.

And we're keeping an eye on shares of Boeing just to torture Jim. It's getting a boost after an upgrade over Deutsche Bank. Bank saying it believes the recent acceleration of aircraft deliveries can be sustained.

Carl Quintanilla (1:30)

Let's begin with the shakeup at OpenAI. Co-founders Sam Altman and Greg Brockman have been hired by Microsoft to lead that company's new AI research team just days after the home of ChatGPT ousted Altman as CEO. A push to reinstate him did fall short. In a post on X, Nadella says that Microsoft moved quickly to provide the new team with the resources needed for their success. He adds the company remains committed to its partnership with OpenAI, working with interim CEO Emmett Shear, who previously ran Twitch.

Jim, the challenge here is to explain to viewers how much this matters. Some of these names our viewers may not know.

Jim Cramer (2:04)

Right. I think that this was a real company. I mean, it was valued at a price that I thought might be the number one IPO whenever it comes.

It had a lot of firepower. Obviously, AI is the thing that's going to drive the next level, let's say, of the Magnificent 7 And I feel, David, that it's the open rebellion and the idea that this company could disintegrate because the letter that I'm seeing from employees, it basically indicates that the company may dissolve.

David Faber (2:31)

I mean, this is just a shocking and fascinating story in so many ways. Obviously, you talk about a potential IPO at some point. You've got to remember it was the unique structure of the company in and of itself that allowed this board to take the action it did for really what are still undetermined reasons.

Sadly, I can't tell you based on what I've heard with any confidence what it was really about. We can refer to the published reports of many reporters who were following it saying maybe it was he who was moving too fast in commercialization, that being Mr. Altman and any number of other concerns perhaps. But the fact is, to your point, Jim, $86 billion was the most recent value. That was a tender that they were going to allow employees to potentially sell some stock at.

And now it's unclear what it could be worth at all, especially given this letter that you just referenced in which hundreds of the company's employees are basically telling this board, you're the worst, you've jeopardized all the work and undermined our mission, your conduct has made it clear you don't have the competence to oversee OpenAI. I do find it rather risible that in fact this letter is also signed by this guy, Ilja Sutskever, who seems to be the reason that Altman and Brockman left in the first place.

Jim Cramer (3:46)

Look, I don't think, it's very funny because we're talking about the Argentinian election, I mean I don't want to draw too many parallels, but I mean Carl, it does seem like it's anarchy. I mean anarchy is the word that comes to mind because I've never seen a major company get rid of the top guy who by the way, you know, this is not Adam Newman, okay? This is a real company with a guy who obviously is very important.

Microsoft goes down eight when he departs, when the company blows up and now it's coming back up, but it shouldn't be worth as much because suddenly it doesn't have a stake in the company. It's worth a lot. So I mean I don't think I've ever seen anything like this other than the fact that it just says the disarray that can happen, look at this, Microsoft's not even up now, the disarray that can happen is extraordinary.