- Microsoft stock closed up 2% at $542.07, pushing valuation back to $4.04 trillion Tuesday
- Deal gives Microsoft 27% equity position in OpenAI’s new for-profit structure worth $135 billion
- Company receives exclusive technology and API access rights lasting through 2032 minimum
- Analysts maintain Strong Buy consensus with average $631.12 share price target
- Agreement includes $250 billion Azure cloud services contract from OpenAI
Microsoft returned to the $4 trillion market capitalization club Tuesday. Shares rose 2% to finish at $542.07, placing the company’s value at $4.04 trillion.
The stock gained momentum after OpenAI announced its corporate restructuring. The AI company will convert to a public benefit corporation format.
State regulators in Delaware and California approved the conversion. This green light allows OpenAI to pursue expanded fundraising options.
Microsoft secured a 27% equity stake in the transformed OpenAI. That position holds a $135 billion value under the partnership terms.
The software maker first joined the $4 trillion club back in July. It became the second company reaching that milestone behind Nvidia.
Apple temporarily crossed $4 trillion the same day before ending lower. The tech leader finished with a $3.99 trillion valuation at $269 per share.
Strategic Partnership Details
Multiple components form the restructured partnership framework. OpenAI agreed to buy Azure cloud computing services worth $250 billion total.
Microsoft locked in exclusive intellectual property and API rights. These privileges run through 2032 with additional protections included.
The exclusive access extends past artificial general intelligence development. This arrangement shields Microsoft’s AI technology investments long term.
Goldman Sachs analyst Kash Rangan reaffirmed his $630 share target. He pointed to clearer technology ownership definitions between the companies.
Morgan Stanley called this deal the solution to Microsoft’s biggest challenge. Analysts there praised the revenue sharing structure and exclusive API terms.
Evercore ISI shared similar positive views on the agreement. The restructuring addresses concerns that had pressured investor sentiment.
Analyst Perspectives
Wall Street maintains a Strong Buy rating consensus on Microsoft. Thirty-three Buy recommendations from the last three months support this outlook.
The average analyst target sits at $631.12 per share. This price point suggests over 16% upside from current trading levels.
William Blair’s Jason Ader acknowledged potential industry headwinds. Growing cloud competition and enterprise software shifts could create obstacles.
However, Ader concluded benefits exceed these potential risks. Stronger Copilot development and Azure revenue opportunities provide growth drivers.
The massive Azure contract positions Microsoft competitively against Oracle. OpenAI had signed a $300 billion cloud deal with Oracle previously.
Financial Results Approaching
Microsoft plans to report first quarter fiscal 2026 earnings Wednesday evening. The announcement follows after the market closes for trading.
Options traders expect higher than normal volatility after results. Trading patterns indicate bigger potential price moves than typical quarterly reports.
The public benefit structure eliminates OpenAI’s previous profit caps. This change allows the AI firm to raise capital without earlier restrictions.
Microsoft’s exclusive rights now cover broader AI model categories. The expanded terms provide better Azure services revenue predictability.
Analysts forecast solid growth from the Intelligent Cloud business unit. Azure performance typically drives this segment’s quarterly numbers.
The partnership includes specific revenue distribution arrangements. These mechanisms offer improved short-term financial transparency per Morgan Stanley.
Microsoft’s API exclusivity remains intact regardless of AGI timeline. This feature maintains the company’s competitive edge in AI markets.
The deal removes what Morgan Stanley labeled the “number one” concern. Investor uncertainty about the OpenAI relationship had created questions.
