Microsoft Shares Jump 4% After New $135 Billion OpenAI Agreement
Microsoft (NASDAQ: MSFT) shares rose 4% on Tuesday morning after the tech giant announced a new definitive agreement with OpenAI, valuing its stake in the artificial intelligence firm at around $135 billion.
The deal builds on the companies’ partnership established in 2019, with Microsoft now holding roughly 27% ownership in OpenAI Group PBC on an as-converted diluted basis. This position reflects a major share among employees, investors, and the OpenAI Foundation.
Microsoft Extends Exclusive AI Partnership Through 2032
Under the new agreement, Microsoft remains OpenAI’s exclusive frontier model partner and retains intellectual property rights through 2032. These rights will now cover models developed after Artificial General Intelligence (AGI) is achieved, provided safety standards and verification are met.
An independent expert panel will confirm AGI milestones, and Microsoft’s IP rights will extend to all post-AGI models. As part of the deal, OpenAI will purchase $250 billion in Azure services, although Microsoft will no longer hold first-refusal rights as the company’s main cloud provider.
The updated structure gives both sides greater strategic flexibility. OpenAI can now collaborate with third parties and provide API access to U.S. national security clients across different cloud platforms. Meanwhile, Microsoft gains the option to pursue AGI development independently or with other partners.
By mid-morning, Microsoft shares were still up 2.4% as investors reacted positively to the expanded collaboration.
Analysts See Long-Term Upside for Microsoft’s Earnings
According to Evercore ISI analyst Kirk Materne, OpenAI currently represents a $0.60-per-share drag on Microsoft’s earnings per share (EPS). However, he noted that the conversion of OpenAI’s structure could lead to a reversal on Microsoft’s income statement, as the company may begin to recognize fair market value gains rather than equity-based accounting.
“Under a fair value method, Microsoft could realize a large unrecognized gain from its OpenAI investment,” Materne explained, adding that the EPS drag will likely fade by fiscal year 2026, potentially offering upside to profit estimates.
More information about the accounting impact of the deal is expected during Microsoft’s earnings call on Wednesday.
