Core Viewpoint - Microsoft Corporation and OpenAI are resetting their partnership, which is expected to be profitable for Microsoft stock [1] Partnership Overview - The partnership began in 2019 with a $1 billion investment from Microsoft, which has since grown to over $13 billion, providing Microsoft access to OpenAI's ChatGPT generative AI program [2] - This collaboration has positioned Microsoft at the forefront of the AI race, resulting in a total return of over 140% for MSFT stock in the last five years [3] Recent Developments - Since 2023, the relationship has faced challenges, particularly after OpenAI's decision to fire Sam Altman in December 2022, leading to the need for an evolution or potential end of the partnership [4] - In January 2025, Microsoft announced it would no longer be OpenAI's sole cloud provider, although OpenAI made a new commitment to Microsoft's Azure platform [5] Future Plans - OpenAI's initial plan to operate as a for-profit entity has been abandoned, but it still aims to go public, with Microsoft expected to finance this IPO using part of the $13 billion investment [6][7] - Microsoft may reduce its equity stake in OpenAI in exchange for access to new technologies developed post-2030, which could be a significant concession from OpenAI [7][8] Stock Performance - Microsoft stock has seen a recent increase of about 3% in a week, with an 18.9% rise over the last month, indicating resilience despite broader market fluctuations [9][10] - The stock is currently trading at a P/E ratio of 36, slightly above historical averages, which may explain its slower climb despite strong earnings [12]
Microsoft and OpenAI Just Hit Reset—Here's Why MSFT Stock Wins