Microsoft (MSFT) Stock: Surges Despite OpenAI Cutting Its Revenue Share

TLDRs;

Microsoft stock rose 1.77% despite OpenAI’s decision to cut its partner revenue share from 20% to 8% by 2030.
OpenAI’s restructuring could boost its own revenue by over $50 billion, raising questions about its nonprofit roots.
Microsoft has already generated billions from its early $1B OpenAI investment, primarily through Copilot and Azure services.
Markets remain bullish, betting Microsoft will sustain long-term AI leadership even under new partnership terms.

Microsoft shares climbed on Thursday, closing at $509.90, up 1.77%, despite news that its long-time artificial intelligence partner, OpenAI, plans to reduce revenue sharing with Microsoft and other stakeholders over the next several years.

The surprising resilience of Microsoft’s stock underscores Wall Street’s confidence in the tech giant’s AI-driven growth, even as the financial contours of its OpenAI partnership begin to change.

Microsoft Corporation (MSFT)

OpenAI Cuts Partner Share to 8%

According to people familiar with the matter, OpenAI expects to share just 8% of its revenue with partners, including Microsoft, by 2030, a sharp reduction from the current 20% allocation. The shift could potentially unlock more than $50 billion in additional revenue for OpenAI.

While OpenAI’s decision appears to dilute Microsoft’s direct earnings from the collaboration, the companies remain locked in negotiations over infrastructure agreements. In particular, discussions are underway over how much OpenAI will pay Microsoft for server rentals, which have been central to the partnership since the Redmond-based giant invested $1 billion in 2019.

The new terms come after OpenAI and Microsoft signed a non-binding agreement that paves the way for OpenAI to formally restructure into a for-profit company, a move designed to attract fresh capital while resolving tensions between its nonprofit origins and commercial ambitions.

Microsoft’s Profitable Bet on AI

Despite the looming reduction in its revenue slice, Microsoft has already reaped substantial rewards from its early bet on OpenAI. That $1 billion investment in 2019 not only secured exclusive licensing rights but also granted Microsoft a 49% share of OpenAI’s profits under capped returns.

This arrangement allowed Microsoft to incorporate OpenAI’s advanced models into its products, including Copilot for Office, Azure AI services, and GitHub Copilot, while leaving the research and compute-heavy model training largely on OpenAI’s shoulders. Analysts estimate that Microsoft has generated upwards of $13 billion in AI-driven revenue thanks to the partnership model.

Equally significant, Microsoft has benefited from OpenAI’s heavy reliance on its Azure cloud infrastructure.

OpenAI’s Shift Reflects Scaling Pressures

The decision to reduce revenue sharing highlights a deeper structural challenge at OpenAI. Originally founded as a nonprofit with a mission to ensure artificial intelligence benefits humanity, the company adopted a hybrid model in 2019, creating OpenAI LP as a profit-driven subsidiary under nonprofit oversight.

That structure allowed investors to achieve capped returns, up to 100 times their initial investment, while directing excess profits to the nonprofit arm.

However, as OpenAI seeks valuations north of $500 billion, these caps and commitments have begun to clash with the realities of scaling an AI business in a market dominated by well-funded giants like Google, Meta, and Amazon.

Market Stays Bullish on Microsoft

For Microsoft, the news has so far done little to dampen investor sentiment. The stock’s climb on Thursday signals that markets continue to see Microsoft as one of the best-positioned players in AI, regardless of how its share of OpenAI’s revenue evolves.

Wall Street analysts argue that Microsoft’s advantage lies not only in its financial stake in OpenAI but in the integration of AI across its ecosystem, from cloud computing to enterprise software. Even if OpenAI reduces Microsoft’s direct revenue share, the broader benefits of embedding cutting-edge AI into its products may more than offset the decline.

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