Microsoft’s quarterly report filed with the U.S. Securities and Exchange Commission (SEC) revealed that in the first quarter of fiscal year 2026, the company’s net income was reduced by $3.1 billion due to losses recognised from its investment in OpenAI.
This also lowered its diluted earnings per share (EPS) by $0.41.
During the comparable period in the previous year, the company’s net income was reduced by $523 million, and diluted EPS declined by $0.07 due to losses from the investment.
This marks a roughly 492.7% increase in losses year-over-year.
Microsoft has committed $13 billion to OpenAI and has already paid $11.6 billion of that amount. The investment is treated as an equity stake, and Microsoft records its share of OpenAI’s profits or losses under “other income (expense), net.”
Recently, Microsoft, in its latest update on its partnership with OpenAI, revealed that it owns a 27% stake in OpenAI.
Based on Microsoft’s filings, The Register noted that if Microsoft holds a 27% stake in OpenAI and reported a $3.1 billion loss from that investment in a single quarter, this would imply that OpenAI’s total loss for the quarter would be roughly $11.5 billion.
The latest agreement between Microsoft and OpenAI supports OpenAI’s transition into a Public Benefit Corporation (PBC) and its broader recapitalisation plan.
Following the change, Microsoft now holds an investment in OpenAI Group PBC valued at around $135 billion, representing roughly 27% on an as-converted diluted basis, which includes all owners, employees, investors, and the OpenAI Foundation.
Before the new funding rounds, Microsoft’s stake in OpenAI’s for-profit entity stood at 32.5%.
Microsoft will remain OpenAI’s sole cloud provider for API products and will retain ownership of its intellectual property (IP) until OpenAI declares the advent of Artificial General Intelligence (AGI).
However, as per the new agreement, this AGI declaration will now be subject to verification by an independent expert panel.
Microsoft’s IP rights for models and products are extended until 2032 and will encompass post-AGI models, provided they incorporate defined safety measures.
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