Investing in the New Era of AI! Microsoft’s Stake in OpenAI Sees a “Paper Gain” of $122 Billion

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Microsoft’s early bet on OpenAI is turning into a historic return that is reshaping the technology landscape.

On May 12, according to Bloomberg, Microsoft’s internal planning documents show the company once set a target return of $92 billion on its OpenAI investment. These documents were publicly disclosed this Monday in federal court—backgrounded by the high-profile lawsuit brought by Elon Musk against OpenAI and Microsoft being heard in federal court in Oakland, California. Microsoft CEO Satya Nadella testified, stating that the investment "succeeded because we took on risk".

On paper, this bet has vastly exceeded expectations. As of the end of March this year, OpenAI’s valuation had soared to $852 billion; as of last October, the value of Microsoft’s stake was about $135 billion—that’s a substantial unrealized gain of $122 billion on a total investment of about $13 billion. Not only has this brought Microsoft enormous returns, it has also objectively helped fuel the current global AI boom.

A Historic Bet for $13 Billion

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

It is reported that the targeted $92 billion return was recorded in Microsoft’s internal planning documents in early 2023. This figure was revealed for the first time in court this Monday, demonstrating the scale of Microsoft’s ambition in this deal and confirming the strategic logic behind Satya Nadella’s assertion of “taking on risk.”

As the generative AI field continues to heat up, OpenAI’s valuation has seen leapfrog growth. As of the end of March this year, OpenAI’s valuation reached $852 billion.

Meanwhile, the market value of Microsoft’s stake has also risen significantly. As of October last year, Microsoft’s stake in OpenAI was valued at about $135 billion. As part of OpenAI’s restructuring last year, Microsoft obtained a 27% ownership share in the company.

Although the partnership between Microsoft and OpenAI has laid the foundation for today’s AI industry landscape, the two have experienced continual friction over the terms of their cooperation in recent years, with direct competition emerging in some business areas.

This “cooperation and competition” dynamic reflects the profound changes in the interests of early strategic partners as the AI industry rapidly evolves.

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