BNP Paribas stated on Tuesday that Microsoft's (MSFT.US) revised agreement with OpenAI has paved the way for "further acceleration in the field of artificial intelligence." Under the agreement, Microsoft will hold a $135 billion stake in the ChatGPT developer.
Stefan Slowinski, Senior Equity Research Analyst at BNP Paribas, wrote in a client report: "For Microsoft, we believe today's announcement removes a long-standing uncertainty. Investors now have a clearer understanding of the future collaboration between OpenAI and Microsoft, and can reasonably incorporate Microsoft's stake in OpenAI into its valuation framework, rather than allowing OpenAI's losses to solely drag on Microsoft's earnings per share growth."
Slowinski explained that OpenAI's commitment to invest $250 billion in Azure cloud services also helps "alleviate market concerns," as investors previously worried that Microsoft might miss out on potential revenue worth hundreds of billions of dollars.
He added: "At the same time, Microsoft gains access to some of OpenAI's research intellectual property (IP), which will accelerate its development in cutting-edge AI models. Considering Microsoft's need to support its internal AI projects while fulfilling OpenAI's new investment commitments, its capital expenditures (capex) may further increase."
Slowinski noted that the revised agreement also impacts other tech companies such as Oracle (ORCL.US), Google (GOOGL.US), and Amazon (AMZN.US).
For Oracle, he stated that the renegotiation of the agreement could ease investor concerns about OpenAI's ability to fund its computing commitments, as the second tranche of SoftBank's funding was unlocked after OpenAI's conversion to a "public benefit corporation."
Slowinski speculated: "More importantly, OpenAI's conversion to a public benefit corporation positions it more favorably—whether raising additional funds as a for-profit private entity or eventually through an initial public offering (IPO)." He also suggested that OpenAI may enter into future partnership commitments with Oracle.
For Amazon, even though OpenAI's GPT API remains exclusive to Microsoft Azure, the agreement could still have a positive impact on Amazon Web Services (AWS). Slowinski said: "Notably, among the major hyperscale cloud providers, Amazon is the only one that has yet to secure a cloud services commitment with OpenAI—Microsoft, Google, Oracle, and Coreweave are all supporting OpenAI's workloads. We believe the removal of Microsoft's 'right of first refusal' opens the door for OpenAI to potentially partner with AWS in the future. Given OpenAI's plan to increase revenue to $200 billion by 2030 (with management citing computing power as the biggest bottleneck), we now see a high likelihood of OpenAI collaborating with AWS, as AWS remains a large-scale, high-performance computing resource untapped by OpenAI."
Slowinski also suggested that the agreement might prompt Anthropic to invest more in AWS to further scale its operations. Conversely, he believes the agreement could negatively impact Google: "On one hand, the removal of the 'right of first refusal' might lead to closer collaboration between OpenAI and Google Cloud, particularly in accessing Google's Tensor Processing Units (TPUs)—similar to Anthropic's recent partnership with Google. On the other hand, OpenAI can now raise funds through private and public capital markets to fuel growth, potentially pursuing new revenue streams more aggressively, especially in advertising. This could eventually lead to OpenAI capturing a larger share of commercial search queries, reigniting concerns about AI-driven search competition."
