Microsoft and OpenAI are staying together for the kids. Sort of. After lengthy deliberations en route to its transformation from a non-profit entity into a for-profit company, OpenAI finally came to terms Tuesday with its Big Tech incubator, Microsoft. It won’t exactly be a clean split. SUBSCRIBE:  Receive more of our free The Daily Upside newsletter. READ ALSO: Wall Street GOAT: Nvidia Rides Deal Bonanza to $5 Trillion Market Cap and Amazon Job Cuts Broaden Big Tech’s Layoff Barrage Now Without Azure-anc ...

Core Insights - OpenAI has undergone a significant organizational restructuring and has publicly shared a detailed timeline for its research goals, notably aiming to achieve fully autonomous AI researchers by March 2028 [1][6]. Group 1: Organizational Changes - The restructuring has simplified OpenAI's architecture, reducing it to two main layers: the OpenAI Foundation, a non-profit organization, and the OpenAI Group, a public benefit corporation [11][13]. - The foundation aims to control the public benefit corporation and has committed to investing $25 billion in AI-assisted medical research [16]. Group 2: Research Goals and Timeline - OpenAI's internal roadmap includes milestones such as having AI research interns by September 2026 and fully automated AI researchers by March 2028 [6][18]. - The organization believes that deep learning systems could achieve superintelligence within the next decade, with significant advancements in AI capabilities already being observed [6][10]. Group 3: Infrastructure and Investment - OpenAI has committed over 30 GW of infrastructure development, with total financial obligations amounting to approximately $1.4 trillion [18]. - The company aims to establish a factory capable of generating 1 GW of computing power weekly, with a target cost of $20 billion per GW over a five-year lifecycle [18]. Group 4: AI Safety and Ethics - A new technique called "Chain of Thought Faithfulness" has been introduced to ensure AI models maintain fidelity to their internal reasoning processes [8][10]. - OpenAI emphasizes the importance of aligning AI values with human principles, especially as AI systems become more intelligent and face complex, ambiguous problems [10][11]. Group 5: Public Engagement and Feedback - During a recent live event, OpenAI acknowledged mistakes in its approach to user feedback and expressed a commitment to improving user experience while ensuring safety for vulnerable populations [3][5]. - The company is actively seeking to balance user freedom with the protection of minors and individuals in vulnerable situations [5][19].

Summary of Microsoft and OpenAI Partnership Conference Call Company and Industry - **Company**: Microsoft - **Industry**: Software and Cloud Services Key Points and Arguments 1. **Partnership with OpenAI**: Microsoft and OpenAI have signed a new definitive agreement, marking the next phase of their partnership, which has evolved since 2019 to advance artificial intelligence responsibly [11][14][8] 2. **Revenue Share Agreement**: The revenue share agreement remains intact, alleviating previous concerns about potential changes to the revenue share structure, which was speculated to drop to 8% [2][8] 3. **API Exclusivity**: Microsoft retains exclusive rights to OpenAI's API until the declaration of Artificial General Intelligence (AGI), ensuring continued competitive advantage in AI services [8][14] 4. **Intellectual Property (IP) Rights**: Microsoft's IP rights have been extended through 2032, including rights to models developed post-AGI, which may be an underappreciated positive aspect of the agreement [8][15] 5. **New Azure Contract**: A significant new contract worth $250 billion for Azure services positions Microsoft as a core supplier for OpenAI, comparable to Oracle [1][2][8] 6. **Financial Projections**: The partnership is expected to lead to substantial increases in commercial bookings and revenue, particularly in the December quarter, reflecting the new Azure contract [8][10] 7. **Market Capitalization and Stock Performance**: As of October 27, 2025, Microsoft's market cap is approximately $3.97 trillion, with a stock price of $531.52 and a price target of $625.00, indicating a strong outlook [6][17] 8. **Earnings Growth**: Projected EPS growth is expected to be robust, with estimates of $15.15 for FY 2026 and $18.36 for FY 2027, reflecting strong operational performance [6][31] Additional Important Content 1. **OpenAI's Investment**: Following recapitalization, Microsoft holds a 27% stake in OpenAI Group Public Benefit Corporation, valued at approximately $135 billion [8][13] 2. **Future Developments**: The agreement allows OpenAI to jointly develop products with third parties, while Microsoft can independently pursue AGI, enhancing innovation potential [15][14] 3. **Risk Factors**: Potential risks include macroeconomic impacts on IT spending and the possibility of limited AI adoption affecting revenue growth [38][32] 4. **Analyst Ratings**: Morgan Stanley rates Microsoft as a top pick with an overweight rating, reflecting confidence in its growth trajectory and market position [26][17] This summary encapsulates the critical aspects of the conference call regarding Microsoft's strategic partnership with OpenAI, highlighting the implications for revenue, market positioning, and future growth potential.

Core Insights - OpenAI has outlined a clear roadmap for AI development, aiming to have AI research interns by September 2026 and fully automated AI researchers by March 2028, emphasizing a systematic approach rather than a sudden emergence of AGI [1][2][49] Group 1: AI Development Timeline - The goal is to create a system capable of independently completing research projects, with AI expected to reach intern-level capabilities by September 2026 and fully autonomous research capabilities by March 2028 [2][3] - The evolution of AI is shifting from merely solving problems to becoming a genuine research system, with expectations of achieving superintelligence within a decade [3][6] Group 2: Training and Infrastructure - OpenAI is focusing on two key variables in model training: the duration of "context computation" during training and the length of "inference time" post-training [8] - A significant investment is being made in infrastructure, with plans to build a facility capable of producing 1 gigawatt of computing power weekly, with a total investment commitment exceeding $1.4 trillion [26][29] Group 3: AI as a Platform - OpenAI is transitioning from viewing ChatGPT as a "super assistant" to developing it into an AI cloud platform where users can create their own AI services [12][15] - The platform will allow enterprises to integrate OpenAI technology via APIs and enable developers to create application-specific intelligent agents [15][18] Group 4: Safety and Security Framework - OpenAI has introduced a five-layer safety framework focusing on value alignment, goal alignment, reliability, adversarial robustness, and system security to ensure AI's safe integration into society [20][21] - A new research direction called "Chain of Thought Faithfulness" aims to make AI's reasoning process transparent and understandable [22][24] Group 5: Organizational Structure - OpenAI's structure has been redefined into a dual-layer system: the OpenAI Foundation, a non-profit controlling the mission, and the OpenAI Group PBC, a public benefit corporation executing commercial tasks [33][39] - The foundation has committed $25 billion to support AI healthcare and resilience initiatives, aiming to leverage AI for disease treatment and societal defense mechanisms [41][42] Group 6: Future Vision - OpenAI emphasizes that the competition among large AI enterprises will not only depend on the strength of their models but also on their ability to establish a balanced structure that integrates research, business, and public welfare [46] - The company envisions a future where AI capabilities are fully integrated into society, with a focus on preparing the necessary social structures before deploying advanced AI technologies [45][49]

Hello and welcome to Eye on AI…In this edition: OpenAI’s new deal with Microsoft…Elon Musk launches Grokipedia…data engineers struggle with AI workloads...and are AI browsers a security risk? Hello, Beatrice Nolan here, filling in for Jeremy Kahn, who is traveling back from the Fortune Global Forum in Riyadh today. In big AI news, OpenAI and Microsoft announced that they had reached an agreement on the future of their partnership that allows OpenAI to complete a long-awaited corporate restructuring.The arr ...

OpenAI has completed its for-profit recapitalization and converted its for-profit arm into the OpenAI Group Public Benefit Corporation, which remains controlled by the nonprofit foundation. Under the deal, Microsoft has gained a 27% stake and retained access to OpenAI’s technology through 2032, including any AGI models verified by an independent panel. The agreement lifts long-standing capital restrictions and ends Microsoft’s exclusive cloud rights. OpenAI and Microsoft jointly announced that they have ...

Core Insights - Microsoft and OpenAI have reached a deal allowing OpenAI to restructure into a public benefit corporation, valuing it at $500 billion and providing more operational freedom [1] - The deal alleviates previous constraints on OpenAI's ability to raise capital, which were established in a 2019 agreement with Microsoft [1][7] - Microsoft retains a 27% stake in OpenAI Group PBC, valued at approximately $135 billion, after investing $13.8 billion, resulting in a nearly 10-fold return on investment [3] Financial Implications - Microsoft shares increased by 2.5%, pushing its market value above $4 trillion [3][10] - OpenAI will purchase $250 billion worth of Azure cloud computing services from Microsoft, while Microsoft will relinquish its right of first refusal for providing computing services to OpenAI [12] Structural Changes - The new structure allows the OpenAI Foundation, a nonprofit, to maintain control over the for-profit entity, simplifying OpenAI's corporate structure [8] - An independent panel will be required to verify OpenAI's claims of reaching artificial general intelligence (AGI) [8] Future Outlook - The deal ensures a continued partnership between Microsoft and OpenAI until at least 2032, with Microsoft retaining certain rights to OpenAI's products and AI models [4][12] - The restructuring is expected to provide a clearer path for OpenAI's fundraising efforts and innovation, despite ongoing scrutiny regarding transparency and safety [9][12]

Core Points - OpenAI has restructured its ownership, converting into a public benefit corporation, with approval from the Delaware attorney general [3][4] - The restructuring allows OpenAI to profit from its AI technology while remaining under nonprofit control [4][6] - Microsoft has acquired a 27% stake in OpenAI's new for-profit corporation, altering the terms of their partnership [5][9] Company Structure - OpenAI's nonprofit will now be called the OpenAI Foundation, which will allocate $25 billion towards health initiatives and cybersecurity related to AI [10] - The nonprofit retains control over the for-profit entity, but concerns have been raised about the actual independence of the nonprofit [10][11] Partnership with Microsoft - The partnership with Microsoft has been revised, with Microsoft retaining rights to OpenAI's confidential research methods until AGI is verified or through 2030 [9] - Microsoft will also maintain some commercial rights to OpenAI products after AGI is declared [9]

Microsoft (MSFT) and OpenAI (OPAI.PVT) announced on Tuesday that they have reached a new agreement that lets the ChatGPT developer move forward with its plans to transform into a for-profit public benefit corporation. Under the new agreement, Microsoft will hold 27% of the OpenAI Group PBC, valued at roughly $135 billion, while OpenAI's nonprofit arm will hold a $130 billion stake in the for-profit entity. Microsoft, however, will no longer have the right of first refusal to serve as OpenAI's cloud provid ...

OpenAI said Tuesday it has reorganized its ownership structure and converted its business into a public benefit corporation after two crucial regulators, the Delaware and California attorneys general, said they would not oppose the plan. The restructuring paves the way for the ChatGPT maker to more easily profit off its artificial intelligence technology even as it remains technically under the control of a nonprofit. OpenAI CEO Sam Altman said in a call Tuesday that “the most likely path” for the newly f ...