OpenAI, the prominent AI startup, finds itself in a state of uncertainty following the sudden firing of its CEO, Sam Altman. The board's decision has sparked a crisis within the company, leading to resignations, discussions about creating a new AI company, and the offer for Altman to return.

 As OpenAI's largest investor, Microsoft (MSFT) is closely watching these developments and assessing the potential impact on its significant investment in the AI firm.

Microsoft has reportedly invested $13 billion in the company. This investment carries strategic value for Microsoft, as it has integrated OpenAI's technology into its Bing search engine and formed a partnership to develop AI models for its Copilot GenAI tools. Additionally, Microsoft has an exclusive license for OpenAI's GPT-4 large language model (LLM).

Altman's sudden firing and the subsequent resignations from other prominent team members have put OpenAI into a state of turmoil. The tensions between Altman's vision of aggressive AI development and the board's more cautious approach played a significant role in his dismissal. Altman's departure has led to concerns about the future of OpenAI, especially with rival AI companies making significant strides.

In a statement, Microsoft expressed its commitment to its partnership with OpenAI despite Altman's firing. The tech giant remains dedicated to developing the underlying AI for its products in collaboration with OpenAI. Microsoft has praised OpenAI's breakthrough work and viewed the partnership as fantastic. It is invested in providing the supercomputing infrastructure for OpenAI's services and delivering all its innovations as part of its Azure AI offerings.

The current crisis at OpenAI poses potential risks for Microsoft's investment. OpenAI's leadership instability may impact the pace and direction of AI development, which can have consequences for the exclusive license of GPT-4 and the technological advancements integrated into Microsoft's products and services.

The departure of key researchers and potential creation of a new company under Altman's leadership could result in the loss of intellectual capital. However, Microsoft's commitment to the partnership suggests that it may extend further support to OpenAI to ensure continuity and minimize any negative impact on its investment. Microsoft has a vested interest in the success of OpenAI, given the potential market value projections.

If OpenAI were to face challenges or uncertainties, it might have an impact on the overall dynamic of the AI landscape. However, predicting specific outcomes, such as one company gaining an advantage over others, is complex and depends on numerous variables. Microsoft and Alphabet (GOOG) are both formidable players in AI, each with their strengths and extensive resources.

The competition between MSFT and GOOG in AI is likely to be influenced by their ongoing developments, product offerings, research initiatives, and the ability to address emerging challenges.

Shares of MSFT were hit hard late Friday as the shocking Altman headlines crossed wires. The stock hit an all-time high of $376 on Thursday. Those gains eroded as MSFT slipped from $372 to $366 in reaction to the news.

The $365 level matches up with last week"s lows and represents significant support for Microsoft shares. If this level gives way, then the stock could be in danger of losing its November gains. The 20-sma ($353) represents a key level for investors to track if the stock continues to stumble around the headlines.

The company that stands to benefit the most from OpenAI Turmoil is clearly Alphabet. The company finds itself trailing MSFT in the race and this hiccup could allow it to gain ground on its rival. GOOG shares edged up 1% following the news and is eyeing up filling its gap down reaction to earnings in late October ($140). GOOG trades at 20x forward earnings which is significantly below MSFT"s lofty 28x price tag. We would watch for signs of a Short MSFT, Long GOOG pair trade this week.

The ongoing crisis at OpenAI following Sam Altman's firing has introduced significant uncertainty into the company's future. As OpenAI's largest investor, Microsoft will closely monitor the developments and their potential impact on its investment. While there are potential risks associated with OpenAI's leadership instability, Microsoft's commitment to the partnership and willingness to provide further financial backing indicate its determination to navigate through these challenges. The resolution of the crisis at OpenAI will likely shape Microsoft's investment strategy and the trajectory of AI development in the near future.