Microsoft took in $7.6 billion from OpenAI last quarter

The relationship between Microsoft and OpenAI may be very tense, but because OpenAI is seeing unprecedented revenue growth, Microsoft, one of its major investors, is benefiting greatly.

When the software giant reported its latest quarterly earnings on Wednesday, it dropped this rather large nugget: Its net income rose by $7.6 billion from its investment in OpenAI.

OpenAI reportedly has a 20% revenue sharing agreement with Microsoft (although neither company has ever confirmed this publicly). Bloomberg reported that the software giant has invested more than $13 billion in the AI ​​lab, which is currently looking to raise additional funding worth between $750 billion and $830 billion.

In September, Microsoft and OpenAI renegotiated some of the terms of their deal when OpenAI was restructured into a public benefit corporation.

As part of the deal, OpenAI agreed to buy Azure services for another $250 billion. This obligation appears on Microsoft’s books as “remaining commercial performance obligations,” or contracts entered into by Microsoft that have not yet been paid. These commitments jumped to $625 billion from $392 billion in the previous quarter. Microsoft said 45% of that comes from OpenAI.

Anthropic received high praise in quarterly earnings as well, as it helped boost Microsoft’s expected future revenue in the form of commercial bookings, which grew 230%. In November, Microsoft announced it was investing $5 billion in Anthropic, and the AI ​​lab has signed on for $30 billion of Azure computing capacity, with the intention of purchasing more later.

But Microsoft is also spending significant sums to fuel its AI machine. It spent $37.5 billion this quarter on capital expenditures, two-thirds of which was on what Microsoft called “short-term” assets: primarily GPUs and CPUs for its Azure cloud for its artificial intelligence service.

The company reported revenue of $81.3 billion (Wall Street analysts expected $80.27 billion, so this is a solid win), up 17% compared to the same period last year. Microsoft Cloud revenue reached $50 billion this quarter for the first time. All of Microsoft’s business units were up double-digit percentages from the same quarter last year with the exception of Windows devices, which were up 1% (basically flat), and Xbox content and services, which were down 5%.