OpenAI is reportedly planning to chop the revenue share it allocates to Microsoft (MSFT), its biggest backer, as part of a broader internal restructuring. According to The Information, OpenAI has notified investors of plans to reduce Microsoft’s revenue share from 20% to approximately 10% by the end of this decade. Both companies declined to provide any official comment.
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The report follows OpenAI’s recent decision to retain its non-profit structure, ending months of deliberation over a possible for-profit shift. On Monday, the company confirmed that its nonprofit arm will remain in charge of operations, including the development of ChatGPT and other AI tools.
OpenAI Rethinks Revenue Model
Under its current agreement, OpenAI is set to share 20% of its revenue with Microsoft through 2030. However, according to internal projections shared with investors, that share is expected to be reduced by at least half by the end of the decade.
The report, based on private documents, also notes that OpenAI has informed some existing and prospective investors that it plans to limit revenue sharing with commercial partners, including Microsoft, to just 10% by 2030. Meanwhile, Microsoft is reportedly seeking continued access to OpenAI’s technology beyond that timeframe. An OpenAI spokesperson told The Information that the company remains in close collaboration with Microsoft and expects to finalize the recapitalization details soon.
Earlier, Microsoft stated that it has “revenue-sharing agreements that flow both ways” with OpenAI, emphasizing that the core aspects of their partnership will remain intact through 2030.
Overall, this move signals a shift in OpenAI’s business structure and could have meaningful implications for Microsoft’s future earnings from the partnership.
Is Microsoft a Good Stock to Buy Right Now?
Microsoft’s strategic backing of OpenAI has reinforced its leadership in the AI space, keeping it at the forefront of innovation.
On Wall Street, MSFT stock remains highly favored, earning a Strong Buy consensus rating on TipRanks. That rating is based on 30 Buys and five Holds assigned in the last three months. The average MSFT stock price target of $506.31 implies a 17% upside potential from current levels.
