Microsoft's (MSFT) revised revenue-sharing deal with OpenAI strengthens its long-term artificial intelligence strategy and gives it greater flexibility to monetize its own AI ecosystem, Wedbush Securities said in a note Tuesday.
Under the revised agreement, OpenAI agreed to cap the total revenue it shares with Microsoft at $38 billion through 2030, down from a previous structure that could have reached $135 billion in total payments, analysts said.
OpenAI will now pay more to Microsoft in the near term while giving up the option to defer some payments to 2032, which accelerates Microsoft's cash inflows even as its long-term upside is capped, the brokerage said.
Analysts view the revised structure as net positive for Microsoft because it reduces reliance on a single highly concentrated deal and allows the company to keep its equity stake and retain access to OpenAI's technology and products through 2032, while no longer sharing with OpenAI revenue from Azure sales of OpenAI models to cloud customers.
"This reinforces Microsoft's increasingly diversified AI strategy, which includes building out its
in-house Copilot ecosystem, developing proprietary AI models, and integrating Anthropic models into M365 productivity tools," analysts said.
Wedbush Securities maintained its outperform rating and $575 price target on Microsoft.
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