OpenAI's rollercoaster November — the firing and swift rehiring of CEO Sam Altman — has brought the artificial intelligence firm closer to 49% stakeholder Microsoft (MSFT). The tech giant now holds a non-voting seat on OpenAI's board amid transition and expansion plans.

RBC Capital Markets Software Equity Analyst Rishi Jaluria discusses the positive position this scenario places Microsoft in.

Microsoft has "clearly shown they have some level of control over OpenAI, given how they were able to get Sam and everyone else back in the seat," Jaluria tells Yahoo Finance. "The question, I think, then becomes would it be better if they worked at Microsoft or at OpenAI? And I think it might be better happening at OpenAI from at least in a near-term perspective."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

This post was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO] - In the weeks since the OpenAI leadership debacle, news about what could have transpired between its then board and CEO, Sam Altman, has been fast and furious.

Discussions about what will happen in the AI space and how it will continue to grow, especially around the push for regulation have been equally pressing.

Our next guest believes Sam Altman's return to OpenAI is good for Microsoft and for software as a whole.

We want to bring in RBC Capital Markets Software Equity Analyst, Rishi Jaluria, to discuss more.

So tell us then, I did want to ask you the question of is it good?

Is it bad?

In terms of this back and forth of Sam Altman for Microsoft and for the AI space.

What is your take about what it does for the whole conversation about AI?

RISHI JALURIA: Yeah, and thanks so much for having me.

Great to be back here in the studio after four years in person.

Look, I think obviously, the ideal scenario would be none of this happened.

But given everything that transpired, it's great to have Sam Altman back in the seat because he is one of those visionary leaders.

I put him alongside an Elon Musk, a Steve Jobs, a Jack Dorsey type, Bill Gates.

And his vision and leadership is really important to advancing AI.

Now, given everything that transpired, I think this is the best scenario outcome for Microsoft because they have a little bit more control over their destiny.

They now have a non-board seat but they still have a say in things with an observer.

They've clearly shown that they have some level of control over OpenAI given how they were able to get Sam and everyone else back in the seat.

And so I think this is great for them.

The question I think then becomes, would it have been better if they worked at Microsoft or at OpenAI?

And I actually think it might be better happening at OpenAI from at least a near term perspective because number one, the pace of innovation doesn't have to slow down.

And number two, all of this is happening at an arm's length transaction.

It's not happening within Microsoft.

So I think OpenAI is free to innovate maybe even faster than they would have had to under Microsoft where there would have been more guardrails.

Not saying this is ever going to happen.

But if OpenAI invents Skynet tomorrow, Microsoft can walk away and say, that's OpenAI that did that.

We didn't do that.

So that's where I think this is actually the best case scenario for Microsoft coming out of this.

- I mean, it felt like everybody's high school crush was back on the market after a long relationship at the end of the day when all of this took place.

All of the companies that were throwing their hat into the ring, trying to get this talent, Salesforce, you had Microsoft trying to woo everybody over there, you had Oracle throwing their hat in the ring.

So all of this considered, I mean, it really sets up for next year even where more of this investment could take place.

To what extent are we looking at some of the potential capital expenditures that could come forward at these arm's length type of deals from mega-cap tech companies next year?

RISHI JALURIA: It's going to be massive.

Remember, the amount of resources required for these generative AI workloads is exponentially higher than a traditional cloud workload.

By my math, it's at least five times higher if not more, especially if you're talking about the training versus the inferencing part of the LLM.

And so there's just a lot of capacity you have build out in terms of actual infrastructure, GPUs.

And the more that companies are trying to figure out what their actual generative AI strategy is experimenting with it and those experiments turn into real use cases, you're going to see, I think, exponential growth in the usage of this underlying platform, which is a great leading indicator for the amount of CapEx that will be required.

I'll also add on, remember, Microsoft is already working on their own competitor too, NVIDIA's GPUs.

I believe AWS is as well.

Google, I've heard is as well.

There's a lot of investment has to become to even narrow the gap.

I mean, what Microsoft has, if you look at the specs, well behind the H100 from NVIDIA.

Not to say that can't close over time, but there's a lot of money that has to be put into capital expenditures.