TLDR
- Microsoft will receive 20% of OpenAI’s total revenue until 2032 under a revised deal.
- The updated agreement lets OpenAI work with other compute providers, removing Microsoft’s first right of refusal.
- Microsoft holds a 27% stake in OpenAI Group PBC, valued at ~$135 billion.
- MSFT stock is down over 25% from its October highs, now trading at $397.24.
- Microsoft trades at 24x forward earnings — its cheapest valuation in nearly three years.
Microsoft’s revised deal with OpenAI locks in a 20% revenue cut through 2032, while its stock sits at a multi-year valuation low after a rough start to 2026.
Microsoft (MSFT) has locked in a 20% share of OpenAI’s total revenue through 2032, according to a report from the Information published Wednesday.
The deal was updated in the fall and extends the original agreement, which entitled Microsoft to 20% of OpenAI’s revenue only through 2030.
Under the new terms, some payments will be deferred to later years.
One key change: OpenAI can now work with other compute providers. Microsoft no longer holds the first right of refusal on that compute relationship.
Last October, Microsoft also announced it would support OpenAI’s transition into a public benefit corporation (PBC).
As part of that move, Microsoft secured a 27% stake in OpenAI Group PBC, with the entity valued at roughly $135 billion.
The deal keeps Microsoft’s exclusive IP rights and Azure API exclusivity intact — at least until an independent panel confirms the arrival of Artificial General Intelligence (AGI).
OpenAI’s $40 Billion Funding Push
OpenAI is currently seeking up to $40 billion in a new funding round aimed at scaling its data center capacity.
Key suppliers including Nvidia (NVDA), Amazon (AMZN), and Microsoft are among those being tapped. Talks with SoftBank and Middle Eastern investors are also ongoing.
The round is expected to close in Q1 2026.
Meanwhile, MSFT stock has had a rough ride. It’s down more than 25% from its October highs, with most of that drop happening in 2026.
The stock closed at $397.24 on February 20, within a 52-week range of $344.79 to $555.45.
MSFT Valuation At Three-Year Low
Despite the selloff, Microsoft’s fundamentals haven’t fallen apart. In Q2 of fiscal year 2026 (ending December 31), the company posted 17% year-over-year revenue growth.
The stock now trades at 24 times forward earnings — the lowest it’s been in nearly three years.
For context, the S&P 500 currently trades at 21.9 times forward earnings, putting Microsoft only slightly above the broader index on that metric.
Azure continues to grow quickly and carries a large backlog of workloads still coming online.
Microsoft’s market cap sits at $2.9 trillion, with a gross margin of 68.59% and a dividend yield of 1.09%.
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