Why Microsoft Stock Tumbled 3.7% Today
Microsoft's stock fell 3.7% amid news that OpenAI, in which it has invested, is in talks to acquire AI company Windsurf for around $3 billion. This decline was sharper than the S&P 500's 2.2% drop. While the acquisition would not directly impact Microsoft, investors are concerned about OpenAI's spending on acquisitions rather than developing AI technology.
Microsoft (MSFT -3.67%) had one of its more forgettable sessions on the stock market Wednesday, with its share price melting by 3.7% at closing time. Yet this had less to do with its own operations, and more to do with a move by a business in which it's invested. That decline was steeper than even the gloomy S&P 500 index's 2.2% fall on the day.
The big buzz in the AI world
In an article published this morning and citing an unnamed "person familiar with the matter," Bloomberg wrote that leading artificial intelligence (AI) company OpenAI is in active talks to acquire another privately held AI business called Windsurf. The deal's price tag is rumored to be around $3 billion.
While OpenAI is a separate entity from Microsoft, the tech giant has invested considerably in the company. It also uses its technology in a number of its products.
If a deal is reached at anywhere near the mentioned price, it would be OpenAI's priciest acquisition in its relatively short history. Windsurf is a developer of AI-assisted coding tools, which streamline the coding process by allowing users to use natural-language prompts to create programs.
Neither OpenAI nor Windsurf had commented on the Bloomberg report. Microsoft had also kept mum on the matter.
A major chunk of change
Of course any acquisition OpenAI makes doesn't directly affect Microsoft. The company has said, however, that it is entitled to share of profit distributions from OpenAI. Investors might feel that OpenAI -- and by extension, Microsoft -- is better off spending billions of dollars to continue developing still-fresh AI technology rather than a bolt-on acquisition.