← Home AI & LLM topic Squawk on the Street

Stocks' AI-Fueled Run-Up, OpenAI-Microsoft Partnership Revamp, "Musk vs. Altman" Heads to Trial 4/27/26

Squawk on the Street

Published: April 27, 2026
Duration: 43:06
Summary source: description
Last updated: Apr 27, 2026

Discusses openai, investing.

Summary

Entering a big week in which most of the Magnificent 7 lead the earnings parade, David Faber and Jim Cramer covered many developments surrounding AI: The record run for stocks including Nvidia's market cap rising back above $5 trillion, OpenAI caps revenue share payments as part of its revamped partnership with Microsoft, Elon Musk's lawsuit against OpenA…

AI stocks hit record highs as Nvidia tops $5T, OpenAI rewrites its Microsoft deal, and Related Digital secures $16B to build Oracle's Michigan data center ahead of the Musk-Altman trial.

Key takeaways

OpenAI and Microsoft restructured their partnership ahead of the Musk-Altman trial: Microsoft's IP license becomes non-exclusive, revenue share continues through 2030 with a cap, and OpenAI can now use any cloud provider—clearing the path for a near-term IPO.
Related Digital secured $16B in financing (anchored by a $10B PIMCO commitment via 144A bonds, 3x oversubscribed) to build a 1+ gigawatt Oracle/OpenAI data center in Michigan, establishing a new public-markets construction financing model for hyperscale AI infrastructure.
Semiconductor stocks are being driven by genuine EPS growth—not just multiple expansion—as memory supply constraints (Micron, Western Digital, SK Hynix) and insatiable data center demand keep pushing prices higher, though early-morning gap-ups signal potential blow-off risk.

Why this matters

The OpenAI-Microsoft restructuring, a novel $16B bond-financed AI data center, and the Musk-Altman trial collectively signal that AI infrastructure financing, corporate governance, and competitive cloud dynamics are entering a new, more institutionalized phase with direct implications for enterprise technology strategy and capital allocation.

Strategic Intelligence Report▼

AI Infrastructure Dominates Market Narrative as OpenAI Restructures Microsoft Partnership and Faces Legal Challenge The convergence of record semiconductor valuations, a landmark $16 billion data center financing, a revised OpenAI-Microsoft partnership, and a high-stakes courtroom battle over OpenAI's founding mission represents a defining moment for the AI infrastructure investment cycle. Institutional investors, corporate strategists, and legal observers with exposure to AI-adjacent assets face a rapidly shifting landscape across capital markets, cloud computing, and corporate governance.

Semiconductor Rally: Earnings-Driven or Multiple Expansion?

The semiconductor index posted a month-to-date gain exceeding 40%, a move described as without modern precedent even by experienced market observers. Nvidia surpassed $5 trillion in market capitalization, Intel recorded its best single-day performance since 1987, and memory names including Micron, Western Digital, and SanDisk continued to advance on supply constraints rather than speculative positioning alone. The discussion frames the central analytical question as whether the rally reflects genuine earnings growth or pure multiple expansion. The assessment offered is that earnings per share have continued to rise alongside prices, meaning the price-to-earnings multiple has not expanded as dramatically as headline price moves suggest. The caveat is explicit: if earnings per share growth stalls, the rally becomes a multiple-expansion story—what one participant calls a "greater fool" dynamic. The structural driver cited is relentless data center construction, with gigawatt-scale announcements appearing daily and chip demand described as effectively uncapped by current supply. A secondary concern flagged is sector rotation: capital flowing into semiconductors is actively draining liquidity from healthcare, software, and other sectors. Software, in particular, is characterized as facing a persistent "software bad, hardware good" market regime, with SaaS names underperforming and at least one major software company receiving a fresh analyst downgrade during the session.

OpenAI-Microsoft Partnership: A Structural Renegotiation

A revised agreement between OpenAI and Microsoft was disclosed the morning of the broadcast, timed immediately before jury selection in the Musk v. OpenAI trial. Key structural changes include: Microsoft retains its position as OpenAI's primary cloud partner, with products shipping first on Azure unless Microsoft cannot support required capabilities; OpenAI gains the right to operate across any cloud provider; Microsoft's IP license becomes non-exclusive; Microsoft will no longer pay a revenue share to OpenAI; OpenAI's revenue share payments to Microsoft continue through 2030 at the same percentage but subject to a total cap; the AGI-trigger clause—under which the partnership terms would have changed upon a panel determining that artificial general intelligence had been achieved—has been eliminated; and Microsoft's approximately 27% equity stake in OpenAI is reported as unchanged. The strategic read offered is that the renegotiation materially strengthens OpenAI's IPO readiness by establishing clear boundaries around the Microsoft relationship, enabling OpenAI to serve enterprise customers across AWS, Google Cloud, and other providers. Amazon, which has committed up to $50 billion in OpenAI, is identified as a significant beneficiary of the non-exclusivity provisions. The timing of the disclosure—hours before trial commencement—is noted as unlikely to be coincidental, given that the Microsoft partnership and AGI clause were central to Elon Musk's legal claims.

Musk v. OpenAI: Two Claims, High-Stakes Witnesses

The trial, presided over by Judge Yvonne Gonzalez Rogers in Oakland, has been narrowed from 26 original claims to two: breach of charitable trust and unjust enrichment. Musk alleges he was induced to fund OpenAI under the premise it would remain an open-source nonprofit, and that the subsequent for-profit restructuring and Microsoft partnership violated that founding promise. Remedies sought include $134 billion in damages (characterized as "ill gotten gains"), removal of Sam Altman and Greg Brockman from leadership, and unwinding of the recent corporate restructuring. OpenAI has signaled to investors that actual damages exposure is likely capped near $40 million—roughly equal to Musk's original contributions. The company's defense centers on the argument that no formal contract to remain a nonprofit existed, and that Musk himself at various points supported a for-profit pivot or a merger with Tesla. The unjust enrichment claim is complicated by the fact that Altman's ownership structure is described as non-traditional and difficult to quantify. The judge, an Obama appointee with prior experience on high-profile tech cases including Apple v. Epic, will have final authority as this is an advisory jury proceeding. Expected witnesses include Musk, Altman, Brockman, and Microsoft CEO Satya Nadella. The trial is scheduled Monday through Thursday with approximately 20 hours allocated per side.

$16 Billion Data Center Financing: A New Capital Markets Model

Related Digital, in partnership with Blackstone as equity co-investor, secured $16 billion in financing for a gigawatt-scale data center campus in Saline Township, Michigan, purpose-built for Oracle and ultimately serving OpenAI's compute requirements. The financing structure is described as a first-of-its-kind application of 144A publicly traded bonds—rather than traditional bank construction lending—to a large-scale data center project. PIMCO anchored the debt with a $10 billion commitment; Bank of America syndicated the remaining $4 billion, which was approximately three times oversubscribed, enabling a tighter spread. The rationale for bypassing bank markets was explicit: the volume of data center paper already outstanding from Oracle and other Stargate-related developments has effectively saturated traditional bank lending capacity. The 144A structure broadens the investor base to include money market funds and other institutional buyers. From a risk perspective, Related Digital carries no speculative exposure: the facility is 100% pre-leased to Oracle. Oracle's credit quality—not OpenAI's—was the underwriting basis for the bond offering. The discussion acknowledges Oracle's negative free cash flow position but notes that investor demand validated Oracle's balance sheet strength. Community engagement practices described include closed-loop water systems, full energy cost pass-through to tenants, local union labor for construction, and direct fiscal contributions to municipalities.

Key takeaways:

- The semiconductor rally is currently supported by rising earnings per share, not pure multiple expansion, but participants identify an earnings growth slowdown as the primary risk that would convert the rally into a speculative dynamic. - OpenAI's revised Microsoft agreement—non-exclusive IP license, multi-cloud access, elimination of the AGI clause, and a capped revenue share—is structured to facilitate an IPO and was disclosed strategically ahead of the Musk trial, where the original agreement was a central exhibit. - The Musk v. OpenAI trial has been narrowed to breach of charitable trust and unjust enrichment; OpenAI's internal damages estimate is approximately $40 million, far below the $134 billion Musk is seeking, and the judge holds final decision authority. - The 144A public bond structure used to finance the Michigan data center is positioned as a replicable model for future large-scale AI infrastructure projects as traditional bank lending capacity for the sector becomes constrained. - A persistent "software bad, hardware good" rotation is actively redistributing capital within the technology sector, with SaaS and traditional software names underperforming while data center supply chain beneficiaries—memory, optical interconnects, and server infrastructure—continue to attract institutional flows.

Show notes

Themes

openai
investing

openai investing

Episode on publisher's site ↗Original audio (RSS) ↗Apple Podcasts (show) ↗