Microsoft's AI Revenue Hinges on OpenAI Partnership Worth Over $24 Billion

Microsoft's AI revenue largely relies on OpenAI, according to recent disclosures. Bloomberg reports that during the fiscal year ending in June, approximately $24.1 billion of Microsoft's total AI revenue came from this partnership. This represents roughly 70% of Microsoft's AI revenue, with CEO Satya Nadella previously stating that the company's AI business was on track to top $37 billion annually.

The reliance on OpenAI explains Microsoft's recent messaging, which appears to be shifting towards open-weight models and cautioning against proprietary AI models dominating entire industries. Nadella has criticized AI labs like OpenAI and Anthropic for opposing 'distillation,' a practice where models are trained on proprietary model outputs to build competitors with less effort. Chinese manufacturers have reportedly been aggressive in this approach.