Summary of Key Points
This news article discusses the investment returns, changes in partnerships, and competitive strategies of Microsoft and Amazon in the field of AI: In fiscal year 2026, Microsoft generated $24.1 billion in revenue from OpenAI (accounting for approximately 70% of its AI business), but their exclusive partnership has loosened, as Microsoft has begun to invest in competing companies. Amazon, too, has made substantial profits by investing in AI firms such as Anthropic and, similar to Microsoft, is reducing its reliance on a single AI company by using “investment in exchange for orders” combined with the development of its own models. Additionally, both companies have increased their capital expenditures to build AI infrastructure, shifting from mere investors to direct competitors.
1. Microsoft Earned $24.1 Billion from OpenAI, accounting for Nearly 70% of Its AI Business
In fiscal year 2026 (ending June 30), Microsoft received $24.1 billion in revenue from OpenAI, which includes investment dividends and fees for OpenAI using Microsoft’s Azure cloud services. More importantly, this revenue constitutes about 70% of Microsoft’s total AI business income. Previously, Nadella stated that Microsoft’s annual AI business revenue exceeded $37 billion; based on growth rates, the annual revenue is estimated to be around $34 billion, making $24.1 billion nearly 70%. Furthermore, OpenAI owes Microsoft $6 billion (accounts receivable), indicating that Microsoft has not only received cash but also an outstanding payment.
The initial $11.9 billion invested by Microsoft in OpenAI (out of a promised total of $13 billion, with $11.9 billion already paid) has been recouped. Last October, Microsoft reported that the investment had returned about 10 times its value. Additionally, OpenAI has committed to purchasing Azure services worth $250 billion, allowing Microsoft to both realize a profit on its investment and secure long-term orders.
2. Microsoft and OpenAI Are No Longer Exclusively Partnered; Microsoft Is Looking for Alternatives
Previously, Microsoft and OpenAI had an exclusive partnership, with OpenAI only being able to use Microsoft’s Azure cloud services. However, this has changed: In February, OpenAI partnered with Amazon, and in April, Microsoft revised the agreement to allow OpenAI to make its models available on other platforms.
Microsoft’s response is to diversify its investments by investing in OpenAI’s competitor, Anthropic (which has already generated $3.2 billion in revenue), as well as in the French company Mistral. This shows that Microsoft does not want to put all its eggs in one basket; if OpenAI becomes closer to other companies, it still has other AI firms as backups.
3. Amazon Is Also Profiting from AI Investments, Using a Similar Strategy to Microsoft
Amazon’s approach is similar to Microsoft’s: It has invested in both OpenAI ($50 billion) and Anthropic ($13 billion in total). In the second quarter of this year, Amazon’s net profit increased by 244% to $62.6 billion, with $534 million coming from investment returns on Anthropic.
A more clever strategy is “using investment to secure orders”: Anthropic has committed to spending at least $100 billion on Amazon’s AWS cloud services over the next decade. This not only ensures long-term revenue for AWS but also allows for the widespread use of Amazon’s own chips, as Anthropic will naturally rely on AWS.
4. The Giants Are Unhappy with Being Just Investors; They Are Also Developing Their Own AI Models
Both Microsoft and Amazon are taking active steps to reduce their dependence on companies like OpenAI and Anthropic:
- Increased Capital Expenditures: Microsoft’s capital expenditure for 2026 is $175 billion (two-thirds of which will go towards AI hardware such as CPUs/GPUs), while Amazon’s is $220 billion (mainly invested in AWS and generative AI) to build their respective AI infrastructures.
- Self-developed Models: Microsoft has released the MAI model family, covering areas such as imaging, speech, and coding; Amazon’s CEO stated that no single model can dominate the market, and therefore they are focusing on developing their own models to control costs.
By doing so, these companies aim to reduce their reliance on other AI firms. If these companies become uncooperative, they will have their own models available and avoid being monopolized by a few dominant players.
5. Analysts Place More Emphasis on “Service Revenue” Than “Investment Returns”
Wall Street analysts are concerned about the composition of Microsoft’s $24.1 billion revenue from OpenAI: How much of it comes from service fees (e.g., payments for using Azure) and how much from investment dividends (e.g., increases in OpenAI’s valuation that benefit Microsoft)?
Analysts at KeyBanc believe that a higher proportion of revenue from services is more desirable, as service revenue is stable (as long as OpenAI continues to use Azure, it will continue to generate income), whereas investment returns are volatile (the valuations of AI firms can rise or fall). This suggests that the long-term stability of Microsoft’s AI business depends on its ability to secure continuous service orders from AI companies, rather than one-time investment gains.
In summary, both Microsoft and Amazon are adopting a multi-pronged approach in the AI field: they invest in AI firms for short-term profits and long-term orders while also building their own infrastructure and developing models to avoid being constrained by others. In this AI race, these giants act as both investors and competitors, with the ultimate goal of controlling the future of AI technology.