OpenAI is in the news for a number of reasons, mostly centered around its open-source plans. The company is pursuing an initial public offering (IPO) that could value the company at around $1 trillion. That caused Elon Musk to take OpenAI to court on the grounds that the company, which Musk co-founded, had fulfilled its mission by moving from a non-profit to a for-profit structure.
Lost in that noise is the news that OpenAI and Microsoft Corp. NASDAQ: MSFT reorganize their relationship. Microsoft will remain OpenAI’s primary partner, but OpenAI can now scale across multiple cloud platforms.
Microsoft also maintains a license to OpenAI models and products until 2032. However, that license is now non-exclusive as well. On the other hand, OpenAI has committed to buy $250 billion in Azure computing services, and revenue share payments from OpenAI to Microsoft will continue until 2030, depending on the total amount.
With MSFT down more than 15% through 2026 and investors questioning the company’s artificial intelligence (AI) infrastructure ambitions, it’s fair to ask: What’s in it for Microsoft? The answer lies not in technology, but in a boring place—Microsoft’s balance sheet.
A $13 Billion Bet That Keeps Paying Off
Microsoft has invested about 13 billion in OpenAI between 2019 and 2023. Management is targeting a $92 billion return on those investments.
As it turns out, that number hasn’t changed much. In October 2025, OpenAI completed its reorganization as a for-profit entity. In doing so, Microsoft’s economic interest in OpenAI was stamped at 26.79% on a fully diluted, adjusted basis.
The restructuring represents a clean accounting event for Microsoft. For the nine months ending March 31, 2026, Microsoft recorded $5.9 billion in its OpenAI profit—a sharp turnaround from a $2.7 billion net loss in the same period last year.
The loss showed how Microsoft accounts for its OpenAI: under the equity-method accounting, Microsoft sees its limited share of the real operating results of OpenAI. As OpenAI has been burning cash at a massive rate, Microsoft has been deducting its share of those losses directly from its income statement.
The turn to profitability wasn’t from OpenAI suddenly turning profitable—it came from a one-time event. When OpenAI was reorganized into a Public Benefit Corporation in October 2025, Microsoft’s acquisitions began: Microsoft ended up with a small percentage of OpenAI, but the company’s stated valuation increased so much faster than the decrease in ownership that Microsoft could book the difference as income.
Largest Funding Cycle in History
On Feb. 27, 2026, OpenAI raised $110 billion at a valuation of $730 billion—the largest private funding round in history. A month later, it increased that round to $122 billion, closing at a post-money valuation of $852 billion.
At that valuation, Microsoft’s 26.79% stake is worth $228.3 billion, a 17.6x multiple of its $13 billion investment. No other major investor comes close to that rate of return. More importantly, after the closing period after the IPO, Microsoft can sell all or part of that equity without breaching any obligations to OpenAI.
Importantly, the IPO will not sever the relationship. The commercial agreements, including the Azure commitment and IP licensing, continue in their contractual form until 2030 and 2032, respectively, without a change in OpenAI’s public or private status.
How Microsoft Can Use Revenue
That leads to another question. Does Microsoft plan to spend that money? This is a guess, but a guess worth considering.
First, Microsoft doesn’t need cash. However, it has committed to an annual AI capital expenditure (CapEx) of approximately $190 billion. In the first half of fiscal 2026 alone, Microsoft spent more on CapEx than in the entire 2025 fiscal year. Any major liquidity event will likely flow to accelerate this structure, especially given that demand is outstripping supply.
CFO Amy Hood admitted that the company expects to remain flat in 2026, with CapEx for the next quarter to exceed $40 billion. A planned sale of OpenAI equity post-IPO (that is, selling in lots rather than all at once) would give Microsoft a more market-friendly way to fund that build without issuing debt or depressing its stock.
Valuation Case for MSFT
Of particular importance to MSFT shareholders is what this accounting event could mean for the company’s bottom line. As of May 12, Microsoft is trading at around $408, putting its market cap at $3.03 trillion. However, the stock is still below its 52-week high of $555.45. That means Microsoft’s $228 billion share of OpenAI represents about 8% of the total market cap.
To put that another way: investors are getting Microsoft’s core business—Azure, Office 365, LinkedIn, Dynamics, GitHub—at a price near multi-year lows for active earnings metrics, while OpenAI’s $228 billion position is effectively moving without incremental costs.
Meanwhile, the use of OpenAI’s Azure is considered as revenue within Microsoft’s AI business line, which now operates at an annual rate of $37 billion, an increase of 123% year-on-year. Even if Microsoft never sells a single part of OpenAI, Azure’s $250 billion commitment alone represents a locked-in cash flow that will cover the end of the decade.
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