Microsoft's $24.1 Billion Bet on OpenAI
Microsoft's largest customer is also its biggest risk, according to its latest annual report. The company earned $24.1 billion in revenue from commercial arrangements with OpenAI, accounting for about 7% of Microsoft's total revenue. This is a significant chunk, as no other customer makes up more than 10% of revenue.
The relationship between the two companies goes beyond just revenue sharing payments. OpenAI owes Microsoft $6.0 billion at June 30, and the company has committed to buying an additional $250 billion of Azure services. This is part of a deal that was revised in April, with a total cap on revenue-sharing payments that extend through 2030.
However, there's a flip side to this relationship. OpenAI burned $3.7 billion in the first three months of 2026, and it expects to burn through almost $280 billion of cash from 2026 through 2030. This has raised concerns that Microsoft may be over-reliant on OpenAI's spending.
The company's commercial backlog grew 84% to $678 billion last fiscal year, but only 25% excluding OpenAI. This means that most of the growth in contracted future revenue comes from one customer. If OpenAI slows its spending, Azure's growth rate could reflect it quickly, and so could that backlog.