Microsoft gained $7.6 billion from OpenAI last quarter

The relationship between Microsoft and OpenAI has often been described as complicated, but OpenAI’s rapid revenue growth is clearly delivering significant financial upside for one of its most prominent backers.

When Microsoft released its latest quarterly earnings on Wednesday, the company revealed that its net income rose by $7.6 billion, driven by its investment in OpenAI.

Although neither company has publicly confirmed the exact terms, OpenAI is widely reported to share roughly 20% of its revenue with Microsoft. To date, Microsoft has invested more than $13 billion in the AI company, which is now reportedly seeking additional funding at a valuation of $750 billion to $830 billion, according to Bloomberg.

The financial relationship between the two companies evolved further in September, when Microsoft and OpenAI renegotiated portions of their agreement following OpenAI’s restructuring as a public benefit corporation.

As part of that revised arrangement, OpenAI committed to purchasing an additional $250 billion worth of cloud services from Microsoft Azure. That obligation appears on Microsoft’s balance sheet under “commercial remaining performance obligations,” which represent contracted revenue that has not yet been recognised. During the quarter, those obligations surged to $625 billion, up from $392 billion in the previous period. Microsoft disclosed that 45% of the total is tied to OpenAI.

Another AI partner also featured prominently in Microsoft’s earnings report. Anthropic was cited as a contributor to Microsoft’s growing pipeline of future revenue, particularly through commercial bookings, which jumped 230% year over year. In November, Microsoft announced a $5 billion investment in Anthropic, alongside a commitment by the AI lab to purchase $30 billion in Azure computing capacity, with plans to expand that usage over time.

At the same time, Microsoft continues to invest heavily in support of its AI ambitions. During the quarter, the company reported capital expenditures of $37.5 billion. Roughly two-thirds of that spending went toward what Microsoft described as “short-lived” assets, primarily GPUs and CPUs used to power AI workloads across Azure’s global cloud infrastructure.

Overall, Microsoft delivered a strong financial performance for the quarter. The company posted $81.3 billion in revenue, exceeding Wall Street expectations of $80.27 billion and marking a 17% increase from the same period a year earlier. Microsoft Cloud revenue reached $50 billion for the first time in a single quarter.

Nearly all of Microsoft’s business segments reported double-digit year-over-year growth. The exceptions were Windows devices, which rose by just 1% and remained flat, and Xbox content and services, which declined by 5% compared to the prior year.