Investing in the Era of AI! Microsoft's Stake in OpenAI Sees $122 Billion Unrealized Profit

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

On May 12, Bloomberg reported that Microsoft's internal planning documents indicated the company had set a target return of $92 billion for its investment in OpenAI. These documents were publicly disclosed this Monday in federal court—against the backdrop of Elon Musk's high-profile lawsuit involving OpenAI and Microsoft, currently being heard at the federal court in Oakland, California. Microsoft CEO Satya Nadella testified in court, stating that "The reason this investment has succeeded is because we took on risk."

From a financial perspective, this bet has far exceeded expectations. As of the end of March this year, OpenAI's valuation had surged to $852 billion, while as of last October, Microsoft's equity in the company was valued at about $135 billion—compared with a total investment of around $13 billion, delivering an impressive unrealized gain of up to $122 billion on paper. This investment has not only brought Microsoft substantial returns, but has also objectively contributed to fueling the current global AI boom.

A Historic Bet Made with $13 Billion

Microsoft's investment in OpenAI began at an early stage, reaching a cumulative total of about $13 billion, extending through early 2023. At that time, ChatGPT was just beginning to rise, and the commercial outlook for generative AI remained highly uncertain.

According to reports, the $92 billion target return was recorded in Microsoft's internal planning documents in early 2023. This figure was revealed for the first time in this week's court hearing, shedding light on the scale of ambition Microsoft set for this deal and validating Satya Nadella's comments on the "strategic logic behind assuming risk."

With the generative AI sector continuing to heat up, OpenAI's valuation has achieved explosive growth. As of the end of March this year, OpenAI's valuation had hit $852 billion.

At the same time, the market value of Microsoft's equity stake also soared. As of last October, Microsoft's equity in OpenAI was valued at approximately $135 billion. As part of OpenAI's restructuring last year, Microsoft acquired 27% ownership in the company.

Although the partnership between Microsoft and OpenAI has laid the foundation for today's AI industry structure, in recent years, the two sides have experienced ongoing friction over collaboration terms and have, in some business areas, gradually developed a more direct competitive stance.

This delicate relationship of "both collaboration and competition" reflects the profound changes in the interests between early strategic partners as the AI industry rapidly evolves.