OpenAI Reset Could Unlock Another AI Growth Wave

Microsoft Corporation NASDAQ: MSFT and OpenAI have announced that they are looking to reset their partnership. The reset is the latest chapter in a story that’s been building between the two companies for the last six years. In this case, it should be profitable for MSFT stock.

The partnership between Microsoft and OpenAI started in 2019 with a $1 billion investment from Microsoft. Over the next several years, that investment grew to over $13 billion, giving Microsoft access to OpenAI’s ChatGPT generative AI program. In that time, Microsoft built its network of AI agents (i.e., Copilots) that ran on top of ChatGPT.

This relationship vaulted Microsoft to the forefront of the AI race, and shareholders were the beneficiaries. MSFT stock has delivered a total return of over 140% in the last five years.

However, since 2023, the relationship between OpenAI and Microsoft has become more strained, starting with OpenAI’s decision to fire Sam Altman in December 2022. At that point, the company’s partnership was yielding positive benefits for both sides. But it also crystallized the idea that the partnership would have to evolve or end.

Breaking Up Is Hard to Do

In January 2025, OpenAI and Microsoft seemed to be heading for a messy breakup. At that time, Microsoft confirmed that it was no longer going to be OpenAI’s sole cloud provider. However, OpenAI was making a “new, large commitment” to Microsoft’s AI cloud computing platform, Azure.

OpenAI was planning to place its business under the control of a for-profit business. That plan has now been abandoned. However, the company’s goals of being a public company haven’t ended, and it will now be financed by none other than Microsoft.

That’s right. While the terms of the new funding aren’t completely clear, it appears that OpenAI will be using some of the $13 billion from Microsoft to fund an initial public offering (IPO). But the plot thickens. Microsoft is expected to have an undefined level of equity in OpenAI’s new business. However, reports are saying that Microsoft may be willing to reduce its equity stake if OpenAI allows Microsoft to have access to new technology developed by OpenAI after the 2030 cutoff.

This would be a key concession from OpenAI and it would be yet another reason for long-term investors to be bullish on MSFT stock.

The OpenAI News Allows MSFT Shareholders to Focus on the Bigger Picture

Microsoft stock is up about 3% in a week when the bulls returned to Wall Street. That’s far below the returns of other technology stocks like NVIDIA Corp. NASDAQ: NVDA and Apple Inc. NASDAQ: AAPL that have gained 15% and 7%, respectively.

However, Microsoft had less to catch up on. Over the last month, MSFT stock is up 18.9%. This cements the notion that Microsoft is a tariff-proof stock. The company will have some exposure to tariffs with its Xbox system. But overall, the company’s software products are immune to tariff concerns.

That said, the company has trimmed its workforce by 3% in the last week. Those cuts, which included many management positions, aren’t being made because of AI efficiencies. Microsoft may be trying to get ahead of what it perceives as a weaker environment for consumer spending on items like video game consoles and personal computers.

At 36x earnings, MSFT stock is trading at a slight premium to its historical averages and near the top of its 52-week range. Those are two reasons MSFT stock hasn’t climbed even after delivering stellar earnings. However, the Microsoft and OpenAI reset is another reason investors are bullish on MSFT stock.

Before you consider Microsoft, you’ll want to hear this.

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