Microsoft's AI infrastructure spending to meet growing cloud services demand is outpacing Wall Street expectations, deepening investor fears about the

This new system means Microsoft will now have a stake in OpenAI with an approximate value of $135 billion. Microsoft will also have access to the company’s technology until 2032, including models that achieved AGI benchmarks — a more powerful type of AI that companies are aiming for. For OpenAI, it will remain Microsoft’s frontier model partner.

However, Microsoft revealed a major drop in profit due to what it termed was an “equity method investment” in OpenAI Group PBC, resulting in a 41-cents-per-share hit to its earnings and a $3.1 billion drop in its net income. Even so, the company’s bottom line was still healthy at $27.7 billion, up from $24.67 billion in the year-ago quarter.

The deal removes a major constraint on raising capital for OpenAI, which was founded as a nonprofit AI safety group.

Microsoft made its first investment in Sam Altman's OpenAI in 2019. It now holds a 27% in OpenAI's for-profit business.

Microsoft and OpenAI unveil a deal extending IP rights, adding independent AGI verification, and giving both sides more freedom while maintaining Azure ties.

Microsoft's CEO, Satya Nadella, told investors that the company plans to double its data center footprint over the next two years.

Under the new pact, Microsoft will get a 27% ownership stake in OpenAI worth about $135 billion, the companies said in a statement Tuesday. In addition, Microsoft will have access to the artificial intelligence startup’s technology until 2032, including models that achieved the benchmark of AI general intelligence.

Microsoft lifted a funding restriction on OpenAI that became a point of conflict after ChatGPT took off required more computing power.

Microsoft and OpenAI reached a deal to allow the ChatGPT maker to restructure itself into a public benefit corporation, valuing OpenAI at $500 billion and giving it more freedom in its business operations.