Microsoft’s OpenAI Bet Delivers $7.6 Billion Amid Rapid AI Growth

U.S, Jan 29 : Microsoft’s deepening partnership with OpenAI has delivered a major financial boost, with the tech giant reporting a $7.6 billion jump in net income during its latest quarterly earnings, driven largely by surging artificial intelligence-related revenue.

While the relationship between the two companies has often been described as complex, the financial outcome appears straightforward. Though neither firm has formally disclosed revenue-sharing terms, OpenAI is widely reported to pass on roughly a fifth of its revenue to Microsoft. With more than $13 billion invested so far, the software maker’s early wager on the AI lab is increasingly paying off.

According to Bloomberg, OpenAI is currently exploring a new funding round that could value the company between $750 billion and $830 billion, placing it among the world’s most valuable private enterprises.

Azure commitments deepen ties

The partnership was restructured in September after OpenAI transitioned into a public benefit corporation. A key outcome was OpenAI’s agreement to purchase an additional $250 billion worth of Azure cloud services, a commitment reflected on Microsoft’s balance sheet as commercial remaining performance obligations.

These contracted revenues climbed sharply to $625 billion during the quarter, up from $392 billion previously. Microsoft disclosed that nearly half of this figure is linked to OpenAI, underlining the scale of the AI firm’s reliance on Azure infrastructure.

Anthropic adds momentum

Microsoft’s expanding involvement with rival AI company Anthropic also contributed to growth. Commercial bookings rose 230%, supported by a $5 billion investment announced in November and a separate agreement for $30 billion in Azure compute capacity, with further expansion anticipated.

Heavy spending to fuel AI growth

The AI push comes with steep costs. Capital expenditure reached $37.5 billion during the quarter, with about two thirds allocated to short lived assets such as GPUs and CPUs needed to power large scale AI workloads. The spending highlights Microsoft’s determination to maintain an edge in the intensifying AI race.

Overall revenue rose to $81.3 billion, surpassing market expectations and marking a 17% year-on-year increase. Microsoft Cloud revenue exceeded $50 billion in a single quarter for the first time, with most business segments posting double digit growth. Windows devices remained flat, while Xbox content and services declined modestly.