Microsoft stock reached a record high on Monday after the company said that Sam Altman, former chief executive of OpenAI, will join the company to head its artificial intelligence innovation leg. The Nasdaq led gains among the main U.S. stock indexes on Monday as Microsoft shares climbed.
Microsoft stocks climbed on news that former OpenAI head Sam Altman will join the software giant, while investors awaited more clues on when the Federal Reserve might begin cutting interest rates.
Why is Microsoft stock up?
Tech behemoth Microsoft shares rose 2.1% to an all-time high close of $377.44 on Monday, beating the previous record of $376.17. That comes after Microsoft stock fell 1.7% on Friday, when Sam Altman was ousted from his position at OpenAI in a boardroom coup. Microsoft is the artificial intelligence firm’s biggest stakeholder, with a $13 billion investment in the company.
Microsoft’s shares advanced 1.4%, notching a record high after CEO Satya Nadella said Altman is set to join the company to lead a new advanced AI research team.
Altman fired from OpenAI
Greg Brockman, who co-founded OpenAI and quit after Altman’s firing, is also joining Microsoft.
Altman’s hiring ended days of speculation that the former chief executive could return to the firm after his dramatic firing. Emmett Shear, former CEO of Amazon-owned streaming service Twitch, will replace OpenAI chief technology officer Mira Murati as interim chief executive.
Microsoft stock forecast
Microsoft shares are up about 56% for the year. It is one of the “Magnificent Seven” that have powered the lion’s share of the market’s returns this year, boosted by Wall Street’s bet that artificial intelligence is the next big thing in tech.
Dan Ives, tech analyst at Wedbush Securities, reiterated his $425 price target for Microsoft’s stock following Altman’s and Brockman’s hires.
“We view Microsoft now even in a stronger position from an AI perspective with Altman and Brockman” at the company, Ives wrote in a note on Monday.
Stock update
Other members of the “Magnificent Seven” saw a boost on Monday. Nvidia shares gained 2.3% to end the trading session at $504.20 ahead of its earnings due on Tuesday, notching a record-high close for the chipmaker.
The information technology sub-index .SPLRCT housing the stock was among top sectoral gainers, up 0.7%.
Other megacap stocks were mixed, with Amazon.com edging 0.7% higher, while Alphabet slipped 0.4%.
The three main U.S. stock indexes have staged a stellar rebound in November, posting gains for the third week in a row on Friday as evidence of easing U.S. inflation supported bets that the Fed was done raising interest rates.
The benchmark S&P 500 .SPX is now only about 2% away from its highest level this year reached in July.
Stock market forecast
“(The rally) is well overdone because we had a very swift move on the idea that they (the Fed) are going to cut interest rates,” said Ken Polcari, managing partner at Kace Capital Advisors.
“You’ll see some consolidation in the market over the next couple of weeks before we get that typical year end seasonal Santa rally.”
Traders have nearly fully priced in the likelihood that the Fed will keep interest rates unchanged in December, and have started pricing in rate cuts as soon as March, according to the CME Group’s FedWatch tool.
A number of catalysts will set the tone for equities this week, with thin trading volumes ahead of the Thanksgiving holiday also affecting market moves.
