Earlier this week, I noted that Microsoft’s annual report showed a $4.7 billion loss related to OpenAI, listed under “other expenses.” Some people speculated that Microsoft might be downplaying the financial details to maintain investor confidence, even though it’s unclear when or if OpenAI will become profitable.
Microsoft’s latest financial report for the first quarter of fiscal year 2026, which ended September 30th, appears to reveal some noteworthy information about their partnership with OpenAI.
Interestingly, the report hints that OpenAI may have lost $11.5 billion in the recent quarter, according to The Register.
As highlighted on page 9 of Microsoft’s official earnings report:
We’ve invested a total of $13 billion in OpenAI, with $11.6 billion already provided as of September 30, 2025. We track this investment using a method that reflects our share of OpenAI’s profits or losses as part of our overall income or expenses.
Although the details are hidden in complicated business language, the second sentence clearly explains how OpenAI’s financial performance – both profits and losses – impacts Microsoft’s overall earnings.
The report provides further information regarding the financial relationship between Microsoft and OpenAI, specifically detailing their arrangements as follows:
Our net income and earnings per share were lower this year and last year due to losses on our investments in OpenAI. This year, those losses reduced our net income by $3.1 billion and earnings per share by $0.41. Last year, the impact was smaller, decreasing net income by $523 million and earnings per share by $0.07.
Microsoft and OpenAI have solidified their partnership with a new agreement. This deal confirms that Microsoft now holds a 27% stake in OpenAI, valued at $135 billion when considering potential future investments.
I’ve learned that Microsoft is now responsible for 27% of both OpenAI’s gains and losses. They recently reported a $3.1 billion hit to their own profits because of their share of OpenAI’s losses. If you do the math, that implies OpenAI itself likely lost around $11.5 billion in the last quarter.
Microsoft hasn’t officially commented, but it confirmed to The Register that the reported $3.1 billion loss occurred during its most recent financial quarter, from July 1st to September 30th.
FAQ
Is OpenAI a profitable company?
Even though the company is a leader in the AI industry, it continues to face financial difficulties and relies on investors for funding. This has recently valued the company at $500 billion.
How much revenue does OpenAI generate annually?
Despite rumors of financial trouble, a recent report indicates that OpenAI earns between $3.5 and $4.5 billion each year. This includes up to $2 billion from ChatGPT and another $1 billion from fees for access to its large language models.
How does OpenAI spend its money?
The AI company is said to be spending a lot – around $7 billion – to train its artificial intelligence models, and another $1.5 billion on salaries. However, it’s only bringing in about $3.5 billion in revenue.
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2025-10-31 14:39