OpenAI Payments Drive Majority of Microsoft's AI Revenue

Microsoft has revealed that OpenAI contributed $24.1 billion in sales during the fiscal year ending in June, which implies that OpenAI represented a majority of Microsoft's total AI revenue, around 70%. This figure accounts for both direct sales and revenue sharing under their deal, which includes payments for computing capacity, model-building costs, and a percentage of OpenAI's sales. The disclosure gives investors a concrete anchor for the business, which had mostly been discussed in estimates.

The $24.1 billion total is significant because it exceeds Microsoft's overall AI revenue run rate, which was previously reported to be around $13 billion for the three months through December 2024 and exceeded $37 billion in the January-March period. The company's CEO, Satya Nadella, said the full-year revenue run rate would reach $37 billion after the March quarter closed.

Microsoft's relationship with OpenAI is complex, as it is both an investor and a cloud provider for the company. This makes it challenging to determine how much of the $24.1 billion comes from cloud services to OpenAI versus a share of OpenAI's own sales. KeyBanc analyst Jackson Ader pointed out that understanding this split is crucial in judging the quality of the revenue.