Microsoft (MSFT)-backed OpenAI is reportedly eyeing acquiring Windsurf, an AI-powered coding assistant, for around $3 billion. Bloomberg was the first to report the news; however, there has been no official announcement from either company involved. The potential deal, which would mark OpenAI’s largest acquisition to date, is still under negotiation and could be altered or called off, according to the report.
What is Windsurf?
Windsurf, formerly known as Codeium, is an advanced AI-powered coding assistant designed for developers and enterprises. It helps developers work faster by suggesting code, supporting real-time collaboration, and understanding context better.
Windsurf competes with other AI coding tools like Cursor, as well as coding features offered by big tech companies like Microsoft, Amazon (AMZN)-backed Anthropic, and even OpenAI.
Meanwhile, Windsurf is backed by investors such as Founders Fund, General Catalyst, Greenoaks, and Kleiner Perkins. According to a February report by TechCrunch, the company was seeking new funding at a valuation of $2.85 billion.
OpenAI Accelerates Efforts in Generative AI Battle
OpenAI is accelerating its efforts to maintain its lead in the generative AI space, as rivals like Google (GOOGL), Anthropic, and Elon Musk’s xAI continue to make substantial investments and launch new products frequently.
Since launching its popular ChatGPT chatbot in late 2022, OpenAI has quickly advanced its models to expand beyond text, incorporating capabilities for images, voice, and video. Yesterday, OpenAI launched its newest AI model, o3, which can “think with images.” This means it can understand and analyze sketches and diagrams, even if they are low quality. Along with o3, OpenAI also released a smaller version called o4-mini.
Interestingly, OpenAI recently closed a record-breaking $40 billion funding round, marking the largest private tech investment in history. This brings OpenAI’s post-money valuation to $300 billion.
Is MSFT Stock a Buy?
Microsoft’s strategic investment in OpenAI has bolstered its position in the AI sector, aligning the company with the latest technological innovations. As an investment, MSFT stock remains highly favored on Wall Street, earning a consensus Strong Buy rating on TipRanks. That rating is based on 32 Buys and three Holds assigned in the last three months. The average MSFT price target of $499.76 implies a 35% upside potential from current levels.
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