Key Takeaways
- An updated partnership agreement grants Microsoft 20% of OpenAI’s revenue until 2032.
- The new terms allow OpenAI to partner with additional compute providers, ending Microsoft’s exclusive first refusal rights.
- Microsoft owns approximately 27% of OpenAI Group PBC, currently valued at around $135 billion.
- Shares of MSFT have declined more than 25% since October peaks, currently priced at $397.24.
- The tech giant now trades at 24x forward earnings — the lowest multiple in almost three years.
A restructured agreement between Microsoft and OpenAI guarantees the software giant a 20% share of revenue through 2032, even as MSFT stock trades at its most attractive valuation in years following a steep decline.
Microsoft (MSFT) has negotiated an extended partnership with OpenAI that guarantees the company a 20% share of all OpenAI revenue through 2032, according to Wednesday reporting from the Information.
The partnership was renegotiated during fall 2024 and represents an extension of the previous arrangement, which only guaranteed Microsoft’s 20% revenue share through 2030.
The revised structure includes provisions for deferred payments spread across future years.
A significant modification: OpenAI now has freedom to engage other compute infrastructure providers. Microsoft’s previous first right of refusal on compute partnerships has been eliminated.
This past October, Microsoft publicly committed to supporting OpenAI’s corporate transformation into a public benefit corporation (PBC).
Through this restructuring, Microsoft obtained a 27% ownership position in OpenAI Group PBC, based on an estimated valuation of approximately $135 billion.
Microsoft retains its exclusive intellectual property licensing and Azure API access — provisions that remain until an independent assessment committee validates the achievement of Artificial General Intelligence (AGI).
$40 Billion Capital Raise in Progress
OpenAI is actively pursuing up to $40 billion in fresh capital through a fundraising initiative designed to expand its data center infrastructure.
Major technology partners including Nvidia (NVDA), Amazon (AMZN), and Microsoft are being approached as potential investors. Discussions with SoftBank and sovereign wealth funds from the Middle East are also underway.
The funding round is projected to reach completion during Q1 2026.
Meanwhile, Microsoft’s stock performance has been challenging. Shares have tumbled over 25% from October’s peak levels, with the majority of losses occurring in early 2026.
MSFT finished trading at $397.24 on February 20, positioned within its 52-week trading band of $344.79 to $555.45.
Forward Earnings Multiple Hits Multi-Year Bottom
The stock decline hasn’t been accompanied by deteriorating business performance. Microsoft’s second quarter results for fiscal 2026 (quarter ended December 31) showed revenue expanding 17% compared to the prior year.
MSFT currently trades at 24 times forward earnings estimates — marking its most compressed valuation in approximately three years.
By comparison, the S&P 500 index trades at 21.9 times forward earnings, meaning Microsoft commands only a modest premium to the overall market on this valuation measure.
The Azure cloud platform maintains strong growth momentum and holds a substantial pipeline of customer workloads preparing to go live.
Microsoft’s market capitalization stands at $2.9 trillion, featuring a gross profit margin of 68.59% and offering shareholders a dividend yield of 1.09%.
