Microsoft just handed investors a number that changes how the company’s AI story reads. OpenAI generated $24.1 billion in sales for Microsoft during the fiscal year ending in June, roughly 70% of Microsoft’s entire AI revenue for the year.
This is based on a Bloomberg report and when you strip OpenAI out, Microsoft’s AI business shrinks dramatically. OpenAI-related commitments also make up 45% of Microsoft’s $625 billion cloud backlog, so the dependency runs through Microsoft’s future earnings, not just this year’s.
It’s worth pausing on this because OpenAI itself is nowhere near profitable. The company is projected to lose around $14 billion in 2026 alone, on top of roughly $22 billion spent against revenue that has only just crossed $25 billion on an annualized basis.
Internal forecasts reportedly show cumulative losses reaching $115 billion by 2029, with OpenAI not expecting to turn a genuine profit until sometime around 2030. Microsoft’s single biggest AI revenue source, in other words, is a company that spends far more than it earns.
Why Microsoft is Hedging
This is why Microsoft has spent 2026 quietly reducing how much it leans on one partner. In April, Microsoft launched its own in-house MAI model family, covering speech, voice, image generation, and reasoning, built by a team under Mustafa Suleyman. Later that month, Microsoft and OpenAI restructured their agreement entirely.
Microsoft gave up its exclusive right to be OpenAI’s only cloud provider; OpenAI can now run on Amazon, Google, or Oracle’s infrastructure, and revenue-sharing terms were capped through 2030. In exchange, Microsoft locked in IP access through 2032 and trimmed its equity stake to roughly 27%.
It seems Microsoft is trying to keep the upside of the OpenAI relationship while building an escape hatch in case that relationship sours or OpenAI’s finances catch up with it.
What If the Partnership Works Out
Optimists see a scenario where OpenAI’s revenue keeps compounding toward its internal $125 billion target by 2029, enterprise and consumer demand for AI tools keeps climbing, and Azure keeps capturing a share of that growth through hosting and the compute-repayment arrangement.
In this version, today’s spending looks like the fiber-optic buildout of the early 2000s or the early cloud computing years, expensive upfront but justified once demand fully arrives.
Microsoft also benefits from owning a stake in OpenAI itself, so OpenAI’s eventual profitability would flow back to Microsoft twice, once through Azure revenue and once through equity value.
What If It Doesn’t
The downside case is less forgiving. OpenAI is losing money at a pace few companies in history have sustained, and it depends on repeatedly raising enormous new funding rounds to keep going.
Its last round valued the company at $852 billion against $115 billion in projected cumulative losses through 2029. If fundraising ever stalls, or a rival like Anthropic or Google pulls ahead on cost or capability, OpenAI’s growth could slow sharply.
Since OpenAI accounts for such a large share of Microsoft’s fastest-growing segment, that slowdown would hit Microsoft’s AI numbers directly, even with the new in-house models providing some cushion.
