TLDR:
- Microsoft is revising terms of its OpenAI partnership to potentially allow for a future IPO
- MSFT stock rose 2.3% to $448.62 on Monday morning
- The companies are rewriting a wider contract originally drafted in 2019
- OpenAI may reduce Microsoft’s revenue share by at least 50% by 2030
- OpenAI recently abandoned plans to place its business under a for-profit entity control
Microsoft is renegotiating its partnership with artificial intelligence powerhouse OpenAI, potentially paving the way for the ChatGPT maker to pursue an initial public offering in the future, according to a Financial Times report.
Report: OpenAI negotiates with Microsoft to unlock new funding and future IPO
OpenAI and Microsoft are rewriting the terms of their multibillion-dollar partnership in a high-stakes negotiation designed to allow the ChatGPT maker to launch a future IPO, while protecting the… pic.twitter.com/MoGYkbfpHx
— Ray Wang (@rwang07) May 11, 2025
The tech giant’s stock climbed in Monday premarket trading following the news, rising 2.3% to reach $448.62. This price movement puts MSFT back at 2025 year-to-date highs, having recovered from losses related to earlier tariff announcements.
The negotiations center around revising terms of a partnership first established in 2019, when Microsoft backed OpenAI with a $1 billion investment. Since then, Microsoft’s total investment has grown to exceed $13 billion.
Neither company has publicly confirmed the report. When contacted by Barron’s, both Microsoft and OpenAI did not immediately respond to requests for comment.
Key Financial Considerations
The talks focus on several important aspects of their relationship. A major point under discussion is Microsoft’s equity stake in OpenAI and how much ownership the tech giant would receive for its substantial investment.
The companies are also evaluating revenue-sharing arrangements that could see OpenAI reducing Microsoft’s share by at least 50% by 2030. This suggests OpenAI may be working to increase its financial independence.
Another interesting element in the negotiations involves Microsoft potentially trading some equity for extended access to OpenAI’s future technology developments beyond 2030. This indicates both companies are thinking long-term about their strategic partnership.
These discussions follow an announcement from January when Microsoft noted it had lost its position as OpenAI’s sole cloud provider. However, OpenAI made a “new, large commitment” to Microsoft’s Azure AI cloud computing platform.
Leadership Changes and IPO Preparations
In personnel developments, OpenAI has appointed Fidji Simo as CEO of Applications. Simo will report directly to OpenAI CEO Sam Altman, marking a strategic organizational change as the company evolves.
Just last week, OpenAI announced it had abandoned plans to place its business under the control of a for-profit entity. This decision came after discussions with civic leaders and attorneys general from California and Delaware.
The timing of these partnership revisions suggests OpenAI may be positioning itself for an eventual public offering, though no official timeline has been established.
Monday’s stock market showed positive movement overall, with futures tracking the S&P 500 and Nasdaq Composite up 3.1% and 4% respectively. This broader market rally came after news that the U.S. would temporarily reduce extra tariffs on Chinese imports to 30% from 145%.
The ongoing negotiations between Microsoft and OpenAI reflect the evolving landscape of AI partnerships and investments. As OpenAI continues to develop groundbreaking technologies like ChatGPT, the terms of its relationship with major backers like Microsoft will shape both companies’ futures.
The outcome of these talks could have major implications for Microsoft’s long-term AI strategy and OpenAI’s path toward becoming a publicly traded company.
Microsoft stock has performed well recently, regaining 13.13% over the past month of trading. Monday’s premarket activity pushed the stock above $447, continuing its upward momentum.
As discussions progress between the two tech companies, investors are watching closely for any official announcements that could further impact Microsoft’s stock price and market position.
The most recent development in this story remains the Financial Times report detailing the partnership renegotiations, with both companies yet to make public statements confirming the specifics of their talks.
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