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Why General Motors Stock Is Higher Today

By John Rosevear - Updated Jan 19, 2021 at 10:26AM

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Microsoft just invested in GM's self-driving project.

What happened

Shares of General Motors (GM -2.47%) opened higher on Tuesday, after the company announced that tech giant Microsoft (MSFT -0.51%) will join a new round of investment in self-driving start-up Cruise.

As of 10 a.m. EST, GM's shares were up about 6.8% from Friday's closing price.

So what

GM and Cruise said on Tuesday that they have entered into a "long-term strategic relationship" with Microsoft. Here are the key points of the deal:

  • Cruise's autonomous taxis will use Microsoft's Azure cloud-computing platform.
  • Azure will become the preferred cloud-computing platform for General Motors.
  • Microsoft will join GM, Honda Motor (HMC -4.19%), and some unnamed institutional investors in a new funding round of more than $2 billion for Cruise. 

Cruise's "post-money" valuation, meaning its valuation after this funding round closes, will be $30 billion, the companies said. That's why shares of GM, which holds a majority interest in Cruise, are higher today.

A Chevrolet Bolt EV with Cruise emblems and self-driving sensor hardware, on a San Francisco street.

Cruise's self-driving taxis will use Microsoft's Azure cloud-computing platform. Image source: General Motors.

Now what

The size of Microsoft's investment wasn't revealed -- it's part of that "more than $2 billion" total -- but there's no doubt it's a significant deal for Cruise, and for Cruise's majority investor, GM.

I expect auto investors will learn more about the deal when GM reports its fourth-quarter and full-year 2020 earnings in early February. 

 

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Stocks Mentioned

General Motors Company Stock Quote
General Motors Company
GM
$37.27 (-2.47%) $0.94
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$259.79 (-0.51%) $-1.33
Honda Motor Co., Ltd. Stock Quote
Honda Motor Co., Ltd.
HMC
$24.55 (-4.19%) $-1.07

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