From OpenAI to Anthropic, Microsoft's new AI empire emerges!

Microsoft is making a new move in its artificial intelligence chess game by deepening its cooperation with Anthropic, OpenAI’s main competitor, shifting its AI strategy from a single core bet to a more diversified platform layout.

According to Wind Chasing Trading Desk, on November 18 local time, Microsoft and Nvidia announced a joint investment in the AI startup Anthropic, with amounts reaching $5 billion and $10 billion respectively. In exchange, Anthropic committed to purchasing $30 billion worth of Microsoft Azure cloud compute capacity in the future. At the same time, several of Anthropic’s cutting-edge large language models, including Claude Sonnet 4.5, will be more extensively integrated into Microsoft’s Azure AI Foundry and Copilot series of applications.

Morgan Stanley interprets this move as proof that Microsoft’s generative AI story is not limited to OpenAI, and that the company’s valuation remains attractive compared to its peers; HSBC points out that Microsoft is building an all-encompassing AI platform with a “frenemy” approach to address customers’ demand for multiple model choices.

Morgan Stanley: More than OpenAI, Microsoft's AI Story Enters a New Chapter

Regarding this cooperation, Morgan Stanley points out in its latest research report that the market has long had a misconception that Microsoft’s AI growth is entirely tied to OpenAI.

Analyst Keith Weiss believes that Microsoft's announcement strongly corrects this view—“Microsoft’s story is not just generative AI (GenAI), and the generative AI story is not just OpenAI.”

Analyst Keith Weiss states that the announcement of expanded cooperation with Anthropic, including their promise to purchase $30 billion in Azure capacity and Microsoft’s investment of up to $5 billion, further broadens Microsoft's business vision.

Analysts at the firm believe this move demonstrates Microsoft’s strong positioning across multiple long-term growth drivers, including:

1. Generative AI (Microsoft is the biggest winner in wallet share growth);
2. Enterprise workloads migrating to public cloud (again, the biggest winner in share growth);
3. Cybersecurity (the largest vendor in the field, with revenue over $40 billion).

Morgan Stanley highlights that Microsoft’s stock is still undervalued, trading at about 25 times its projected 2027 fiscal year earnings per share (about $20.40), below major software peers’ P/E ratios of 30. Therefore, the firm reiterates its “Overweight” rating for Microsoft and lists it as a “Top Pick” in the large software sector, with a target price of $650.00, representing over 30% potential upside from current levels.

HSBC: AI Market Moving Toward ‘Frenemy’ Model, Azure Platform Value Highlights

HSBC’s research report interprets from the perspective of industry competition structure, believing the AI market is shifting toward a ‘frenemy’ model. The report notes that while Microsoft was deeply bound to OpenAI, OpenAI also signed a $38 billion infrastructure deal with Amazon AWS, and Anthropic itself has received investment from Amazon and Google.

The report believes that Microsoft’s cooperation with Anthropic, on one hand, reduces its single reliance on OpenAI and broadens the AI supply chain; on the other hand, it greatly strengthens Azure’s position as a “multi-AI model platform,” meeting enterprise customers’ need for flexible model options.

The firm believes enterprises' demand for model flexibility is increasing; by expanding the AI supply chain, Microsoft not only retains customers wanting to try different models but also locks in future massive revenue through compute contracts. HSBC maintains a “Buy” rating for Microsoft and raises the target price to $667, believing Microsoft has ample data, infrastructure, and AI weaving capabilities to coordinate this increasingly complex ecosystem.

Microsoft’s cooperation with Anthropic expands its presence in AI, but does not change its core partnership with OpenAI. Microsoft CEO Satya Nadella said in a video released Tuesday:

"We will increasingly become each other's customers—we will use Anthropic’s models, they will use our infrastructure, and we will go to market together. Of course, all of this builds on our partnership with OpenAI, which remains a key partner for Microsoft."

“Circular Financing” Model Raises Concerns, Market Wary of AI Bubble Risk

Although the two Wall Street firms are positive, the deal comes as talk of an AI bubble is heating up. Wallstreetcn previously wrote that such cooperation is seen by the market as a kind of “circular financing” or “AI closed loop”: chip and cloud service giants (Nvidia, Microsoft) invest in model developers (Anthropic), who in turn use the funds to buy chips and cloud services from the former.

This capital flow within the system has led some investors to question whether AI products can generate enough actual income to support the heavy investment. Data from Bank of America shows 45% of fund managers see the “AI bubble” as the market’s biggest tail risk.

In fact, on the day the cooperation was announced, both Microsoft and Nvidia’s stock prices fell nearly 3%, partly reflecting Wall Street’s concern about industry overheating. For investors, while optimistic about Microsoft’s AI strategic layout, caution is warranted regarding the sustainability of this model and potential bubble risks.

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The above fascinating content is from Wind Chasing Trading Desk.

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