Microsoft takes $3.1 billion hit from OpenAI investment

Core Insights - Microsoft has committed a total of $13 billion to OpenAI since 2019, with $11.6 billion already funded as of September 2025, following OpenAI's recapitalization announcement [2] - OpenAI Foundation now holds a 26% stake in its for-profit arm, while Microsoft’s investment in the public benefit corporation is valued at $135 billion, representing approximately 27% of the company [4] - Microsoft reported a net income of $27.7 billion for the latest quarter, reflecting a significant increase from $24.67 billion a year ago, despite a $3.1 billion hit due to its investment in OpenAI [3] Investment and Financial Structure - OpenAI has transitioned to a nonprofit structure with a controlling stake in its for-profit business, now named the OpenAI Foundation [2] - The new structure includes 47% of the for-profit being held by current and former employees and investors [4] - Microsoft will no longer have the right of first refusal as a compute provider under the new agreement, which includes OpenAI contracting to purchase an additional $250 billion of Azure services [5] Competitive Landscape - Microsoft has identified OpenAI as a competitor in AI offerings, search, and news advertising, alongside major players like Amazon, Apple, Google, and Meta [6] - Microsoft has begun testing its own AI model to enhance its Copilot assistant, indicating a shift towards developing in-house AI capabilities [7] - The Azure cloud segment remains a significant growth driver for Microsoft, reporting a 40% revenue increase [7]