Microsoft and OpenAI probably have notoriously rocky relationships but when OpenAI experienced unprecedented revenue growth, Microsoft, one of its main investors, benefited greatly.
While the software giant reported The latest quarterly earnings, dropped this rather large nugget: net income increased by $ 7.6 billion from investments in OpenAI.
OpenAI the news has a 20% revenue sharing agreement with Microsoft (although neither company has ever publicly confirmed this). The software giant has invested more than $13 billion in the AI lab, which is now looking to raise additional funds worth between $750 billion and $830 billion. Bloomberg reported.
In September, Microsoft and OpenAI renegotiated some of the terms of the deal when OpenAI was restructured into public benefit corporation.
As part of the deal, OpenAI agreed to buy another $250 billion in Azure services. The commitment shows Microsoft Books is an “outstanding commercial performance obligation,” or a Microsoft-owned contract that has not yet been paid. The liability rose to $625 billion from $392 billion in the previous quarter. Microsoft says that 45% is from OpenAI.
Anthropic got its quarterly earnings as well, to help boost Microsoft’s anticipated future revenue in the form of commercial orders, which rose 230%. In November, Microsoft declare which invested $ 5 billion into Anthropic and the AI lab has signed up for $ 30 billion of Azure computing capacity, with the intention of buying more later.
But Microsoft is also spending big to feed its AI engine. It spent $37.5 billion in the quarter on capital spending, two-thirds of which was on what Microsoft called “short-term” assets: mainly GPUs and CPUs for the Azure cloud to serve AI.
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The company reported $81.3 billion in revenue (Wall Street analysts were expecting $80.27 billion, so it was a strong beat), up 17% over the year-ago period. Microsoft Cloud revenue reached $50 billion this quarter for the first time. All of Microsoft’s business units grew by a double-digit percentage over the past quarter except for Windows devices, which gained 1% (mainly flat), and Xbox content and services, which fell 5%.