OpenAI, whose ChatGPT heralded a new era of mainstream adoption of AI, is looking at reviewing its current partnership agreement with its biggest backer, Microsoft (MSFT). As OpenAI mulls an IPO, the company is looking to primarily renegotiate the terms of revenue sharing with Microsoft, as well as the latter’s access to OpenAI’s intellectual property such as models and products. Experts anticipate that OpenAI will seek to cut its revenue share for Microsoft down from 20% to 10%. 

Since its first $1 billion investment in 2019, Microsoft has significantly deepened its backing of OpenAI, bringing its total investment to around $13 billion. OpenAI is now valued at approximately $300 billion.

So, as OpenAI gradually but steadily shifts toward going public, is this expected decoupling from Microsoft a cautious strategic move? More importantly, will Microsoft’s AI prowess be dealt a blow because of this anticipated development? 

Let’s have a closer look.

Microsoft Has Sound Fundamentals

Microsoft would be a no-brainer pick if fundamentals were the sole criterion for investing in a stock. Consistently outpacing its revenue and earnings expectations, the most recent quarter saw Microsoft report a beat on both revenue and earnings. Again.

Total revenues of $70.1 billion represented yearly growth of 13.3% while earnings went up by 17.7% in the same period to $3.46 per share, exceeding the Street expectations of $3.22 per share. Its services business, which includes the company’s lucrative cloud segment, drove the overall growth in revenues as it moved up to $54.7 billion from $44.8 billion in the year-ago period.

Net cash from operations came in at $37 billion, up from about $32 billion in the prior year as the company closed the quarter with a cash balance of $28.8 billion and no short-term debt on its books.

Analysts are still forecasting strong growth for Microsoft with forward revenue and earnings growth rates pegged at 14.28% and 16.04% compared to the sector medians of 6.82% and 10.50%, respectively.

Overall, Microsoft’s share price has gone up by 7.8% on a YTD basis, providing it with a market cap of $3.37 trillion. 

Solid Position in the Market

Microsoft’s robust financial standing is largely the result of disciplined capital allocation and strategic execution, which together have established the company as one of the most influential technology firms in modern times. A major catalyst for its continued momentum lies in the rising global appetite for artificial intelligence and cloud infrastructure, both of which are driving the company’s next leg of data center expansion.

In its most recent quarterly update, Microsoft reported cloud-related revenues of $42.4 billion, marking a 22% increase from the prior year. This underscores the growing conviction that AI has become indispensable for businesses seeking to boost productivity, lower operational costs, and drive scalable growth. What further strengthens Microsoft’s advantage is the company’s ability to embed its proprietary and open-source AI tools directly into its broad portfolio of consumer, enterprise, and commercial software offerings. This has not only supported elevated average revenue per user but also sustained growth in user adoption, even in the wake of the subscription price hikes implemented in January 2025.

Azure, alongside other cloud solutions, continues to post solid gains as Microsoft scales its infrastructure footprint. The company activated new data center regions across 10 countries, while making efficiency gains in energy use and system performance through improved design. During the third fiscal quarter of 2025, management disclosed that demand for compute resources was outpacing prior expectations, necessitating even greater capital deployment to support AI workloads. Accordingly, additional capacity is anticipated to come online in the final quarter of 2025.

Despite these growing demands, Microsoft maintained its previously communicated capital expenditure target of $80 billion for 2025, while also signaling that investment levels may climb further in 2026.

Lastly, tying back to my previous analysis, Microsoft is investing heavily in quantum computing through its Majorana chip development. This effort positions the company to compete in what many believe will be the next major technological frontier beyond AI.

Analyst Opinions on MSFT Stock  

Analysts have deemed Microsoft stock a “Strong Buy” with a mean target price of $508.48, which denotes upside potential of about 12% from current levels. Out of 46 analysts covering the stock, 38 have a “Strong Buy” rating, four have a “Moderate Buy” rating, and four have a “Hold” rating.