When Bill Gates cautioned Satya Nadella that Microsoft Corporation's (NASDAQ:MSFT) $1 billion OpenAI investment could go up in flames, few could have imagined it would turn into a $135 billion stake.
From Lighting Money On Fire To A $135 Billion Win
Microsoft shares climbed nearly 2% Tuesday after the company unveiled a new chapter in its partnership with OpenAI, converting its stake into a 27% ownership in OpenAI Group Public Benefit Corporation valued at roughly $135 billion.
The move cements Microsoft's status as OpenAI's frontier model partner, with exclusive rights to its intellectual property and Azure API until artificial general intelligence is independently verified.
Following the announcement, Nadella spoke about the partnership and how it didn't start with confidence. During an appearance on The TBPN Show, Nadella recalled a blunt remark from Microsoft co-founder Gates.
"I think you know Bill even said ‘you’re going to burn this billion dollars,'" Nadella recalled, adding, "We kind of had a little bit of high risk tolerance."
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How Microsoft's Partnership With OpenAI Evolved
Nadella said his relationship with OpenAI CEO Sam Altman dates back to 2016, when OpenAI first began using Microsoft's Azure cloud.
"I think Elon [Musk] sent me the email asking for Azure credits," Nadella noted. "That's how it got started."
The collaboration gained momentum in 2019 when Altman approached Microsoft about scaling AI research. He said that the tech giant has always been obsessed with natural language since the early days of Microsoft Research.
"When Sam said ‘hey we’re going to go take a run you ought to be on it' that’s sort of what led to really coming together on this," Nadella said.
Microsoft Extends AI Leadership Ahead of Earnings
Under the new deal, OpenAI has committed to purchasing an additional $250 billion in Azure cloud services, while Microsoft's intellectual property rights have been extended through 2032.
With its next earnings report due Oct. 29, analysts like Bank of America's Brad Sills expect Microsoft to continue expanding AI infrastructure through a strategic and measured approach — prioritizing scalable growth and energy self-reliance.
Benzinga's Edge Stock Rankings place MSFT in the 97th percentile for Growth, underscoring its solid long-term fundamentals and strong investor confidence. Click here to see how it compares with its peers.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
