Investing in the AI era! Microsoft’s stake in OpenAI has a "paper profit" of $122 billion

Microsoft’s early bets on OpenAI are now paying off with a historic return that is reshaping the tech landscape.

On May 12th, according to Bloomberg, internal planning documents from Microsoft show that the company had set a target return of $92 billion on its investment in OpenAI. These documents were publicly disclosed this Monday in federal court—against the backdrop of a high-profile lawsuit filed by Elon Musk regarding OpenAI and Microsoft, currently being heard in the Oakland Federal Court in California. When Microsoft CEO Satya Nadella testified, he stated that “the success of this investment is because we took risks.”

From the financial data, this bet has significantly exceeded expectations. As of the end of March this year, OpenAI’s valuation has soared to $852 billion; whereas, as of October last year, the valuation of Microsoft’s stake was about $135 billion—compared to its total investment of roughly $13 billion, the unrealized gains on paper are substantial, reaching $122 billion. This investment has not only brought Microsoft substantial returns but also objectively contributed to the current global AI boom.

A historic bet for $13 billion

Microsoft’s investment in OpenAI began early, totaling approximately $13 billion, extending into early 2023. At that time, ChatGPT was still in its explosive early stages, and the commercial prospects of generative AI remained highly uncertain.

According to reports, the $92 billion target return was recorded in Microsoft’s internal planning documents from early 2023. This figure was publicly revealed for the first time during Monday’s court hearing, unveiling the scale of ambition Microsoft set for this deal and confirming the strategic logic behind Nadella’s statement about “taking risks.”

As the generative AI sector continues to heat up, OpenAI’s valuation has achieved a leap forward. As of March this year, OpenAI’s valuation reached $852 billion.

Meanwhile, the market value of Microsoft’s stake has also risen sharply. As of October last year, Microsoft’s valuation of its OpenAI holdings was about $135 billion. As part of OpenAI’s restructuring last year, Microsoft acquired a 27% ownership stake in the company.

Although Microsoft’s partnership with OpenAI has laid the foundation for the current AI industry landscape, the two sides have experienced ongoing friction over cooperation terms in recent years and are gradually forming more direct competitive dynamics in some business areas.

This “cooperate yet compete” delicate relationship reflects the profound changes in the利益格局 (interest landscape) among early strategic partners amid the rapid evolution of the AI industry.

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