OpenAI: Microsoft now holds a 27% stake in the ChatGPT maker, with shares worth $135 billion

Microsoft has famously invested approximately 13 billion dollars in OpenAI over the years, which have now become (at least on paper) 135 billion dollars: Following a recapitalization, Microsoft holds a stake in the newly restructured OpenAI Group PBC (Public Benefit Corporation) valued at around 135 billion US dollars. This represents a share of approximately 27 percent on a fully diluted basis, as both companies announced in a joint statement. This calculation includes all shareholders – employees, investors, and the OpenAI Foundation.

Prior to the recent financing rounds, Microsoft had held a 32.5 percent stake on a converted basis in the for-profit portion of OpenAI, according to its own statements. The reduction in percentage ownership alongside the increase in absolute value of the stake is due to the capital increases that brought in new investors and raised the company’s overall valuation.

New Contractual Agreements

The collaboration between Microsoft and OpenAI began in 2019 with the stated goal of responsibly advancing artificial intelligence and making its benefits accessible to a broad audience. What originally started as an investment in a research organization has evolved into one of the most successful partnerships in the technology industry. Since then, the companies have developed in different directions – OpenAI has found other partners in SoftBank, Oracle, and Nvidia, while Microsoft has opened up to other AI model providers such as Anthropic and is developing its own Phi models.

Both companies have now signed a new binding agreement that places the partnership on a new foundation and creates more flexibility for both sides:

Core elements of the agreement:

• OpenAI remains Microsoft’s partner for frontier models
• Microsoft retains exclusive rights to intellectual property and Azure API exclusivity until the achievement of Artificial General Intelligence (AGI)
• Microsoft’s IP rights for models and products are extended until 2032 and now also include models after AGI is achieved
• OpenAI commits to purchasing additional Azure services worth 250 billion dollars
• Revenue sharing remains in effect until AGI is verified by an independent expert panel

New freedoms for both partners:

Microsoft can now independently develop AGI, alone or with other partners. OpenAI, in turn, receives more autonomy: The company can develop products jointly with third parties, release open-weight models, and grant API access to US government agencies in the national security sector – independent of cloud provider.

Valuation and Market Significance

The valuation of Microsoft’s 27 percent stake at 135 billion dollars implies a total valuation of OpenAI of around 500 billion dollars. This makes OpenAI one of the most valuable startups worldwide and underscores the enormous significance attributed to the generative AI market.

The restructuring into a Public Benefit Corporation marks an important step in the evolution of OpenAI, which was originally founded as a non-profit research organization and later created a hybrid structure with a for-profit subsidiary.

Both companies emphasize that the new agreement positions them better than ever to develop products that meet real needs and create new opportunities for individuals and businesses.