"Microsoft holds a ~$135 billion investment representing approximately 27% of OpenAI on an as-converted diluted basis. OpenAI revenue flows largely through Azure, and OpenAI has contracted to purchase an incremental $250 billion of Azure services, providing a massive revenue floor. In addition, OpenAI signed a deal where 20% of total company revenue will go to Microsoft through 2032. Microsoft's stock is down 17.4% year-over-date despite strong cloud performance. The company reported $81.27 billion in Q2 FY2026 revenue, with Azure growing 39% year-over-year."
"The company reported $81.27 billion in Q2 FY2026 revenue, with Azure growing 39% year-over-year. CEO Satya Nadella stated that "Microsoft has built an AI business that is larger than some of our biggest franchises." The valuation surge validates Microsoft's OpenAI bet but introduces risk. An OpenAI at this scale could eventually IPO and compete directly with Microsoft's AI products. Microsoft's $29.88 billion in Q2 capital expenditures reflects the infrastructure arms race underway."
OpenAI's potential funding round could value the company above $850 billion and become the largest private raise in history. The capital will support compute infrastructure, talent acquisition, international expansion, and R&D, creating a competitive advantage similar to SpaceX's private fundraising strategy. Microsoft owns roughly 27% of OpenAI and stands to receive substantial Azure revenue and 20% of OpenAI's total company revenue through 2032, but faces potential competition if OpenAI IPOs or scales products that overlap with Microsoft's offerings. Google is positioned as OpenAI's most direct competitor, and Google Cloud showed strong growth to $17.7 billion in Q4 2025.
Read at 24/7 Wall St.
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