The Irony of Microsoft's AI Bet

Here's something you might not expect: the company that bet biggest on OpenAI has been the worst-performing big tech stock since ChatGPT changed everything. Investor Chamath Palihapitiya, better known as the "SPAC King," pointed this out on X Thursday, and the numbers are pretty striking.

Since ChatGPT launched on November 30, 2022, Microsoft Corp. (MSFT) has gained about 59%. That sounds great until you look at everyone else. Meta Platforms Inc. (META) is up 441%. Alphabet Inc. (GOOGL) has gained 209%. Even Amazon.com Inc. (AMZN) is up 117%, and the Invesco QQQ Trust (QQQ) has climbed 110%.

"Microsoft has been the worst-performing stock of the hyperscalers since the November 30, 2022, launch of ChatGPT and has significantly underperformed the Nasdaq during that period," Palihapitiya wrote.

Then came the kicker: "Looking at this chart, you'd have thought that Meta and not Microsoft was the one that owned 25% of OpenAI and ran the cloud for them."

The Performance Gap

The data tells a pretty clear story. From December 2, 2022 to now, here's how the hyperscalers stack up:

Execution Questions Mount

It's not just about stock performance. Doug O'Laughlin, president of SemiAnalysis, recently said Microsoft is "getting owned" in the AI race despite its OpenAI partnership. His criticism focused on execution problems, particularly delays in integrating new AI models, which he called a "skill issue."

That stings, especially considering Microsoft holds a 27% stake in OpenAI (not the 25% Palihapitiya mentioned) and has poured approximately $14 billion into the company since 2019. You'd think that kind of investment and partnership would translate into market dominance, but the stock performance suggests investors aren't convinced.

Meanwhile, OpenAI itself seems to be hedging its bets. The company has been diversifying its cloud partnerships, signing contracts with Oracle Corp. (ORCL) and Alphabet's Google. OpenAI is also pursuing its own massive $300 billion data center project, which raises questions about how exclusive Microsoft's relationship with the AI leader really is.

At publication time Thursday, Microsoft shares were trading at $406.31, just barely above where they started this whole AI revolution.