Microsoft is close to getting a giant new equity stake in OpenAI. It could be worth at least $150 billion.

Core Insights - Microsoft’s investment in OpenAI, initially $1 billion in 2019, is now seen as one of the smartest technology investments, with potential returns exceeding $150 billion due to OpenAI's restructuring into a for-profit public benefit corporation [1][2][12]. Investment Details - Microsoft has invested approximately $13 billion in total to acquire its stake in OpenAI, which includes the initial $1 billion and a larger investment made in early 2023 following the launch of ChatGPT [3]. - Analysts estimate that if the restructuring proceeds as planned, Microsoft could see a return of more than tenfold in just a few years, comparable to other successful investments by major tech companies like Google and Facebook [4][5]. Corporate Restructuring - OpenAI's restructuring is driven by the need for traditional equity stakes to attract new investors, as its previous structure posed challenges in fundraising [7][12]. - The negotiations between Microsoft and OpenAI have been somewhat contentious, but both companies are nearing a resolution that could benefit them mutually [12]. Equity Stake Valuation - Microsoft is expected to acquire approximately 30% of the new equity in OpenAI, which could add around $150 billion to Microsoft's valuation based on a $500 billion valuation for OpenAI [14][16]. - The potential value of Microsoft's stake could increase with higher ownership percentages, with estimates ranging from $150 billion for 30% to $175 billion for 35% [16][17].