Microsoft's latest earnings report suggests that OpenAI is burning through wads of cash to keep up with the AI hype.
Microsoft's latest financial report seemingly suggests that OpenAI might have incurred a $11.5 billion loss.(Image credit: Getty Images | SOPA Images)
Earlier this week, I reported that Microsoft had filed a $4.7 billion loss by OpenAI in its annual report for the fiscal year ending June 30 under "other expenses". Speculations suggested that the tech giant was being less than truthful about its financials to keep investors enthused about the ever-evolving landscape, despite not having a clear-cut path to profitability.
Perhaps more interestingly, buried deep in the report, several passages seemingly suggest that OpenAI might have incurred a $11.5 billion loss in the quarter that just ended (via The Register).
As highlighted on page 9 of Microsoft's official earnings report:
"We have an investment in OpenAI Global, LLC (“OpenAI”) and have made total funding commitments of $13 billion, of which $11.6 billion has been funded as of September 30, 2025. The investment is accounted for under the equity method of accounting, with our share of OpenAI’s income or loss recognized in other income (expense), net."
While the loss is obscured by financial and corporate jargon, the second sentence in the highlighted statement offers a clear equity breakdown, showing how OpenAI’s profits and losses affect Microsoft’s net income.
More details about Microsoft and OpenAI's financial dealings are highlighted in the report as follows:
Get the Windows Central Newsletter
All the latest news, reviews, and guides for Windows and Xbox diehards.
"Current year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $3.1 billion and $0.41, respectively. Prior year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $523 million and $0.07, respectively."
This means Microsoft will incur 27% of OpenAI's losses and profits. Disclosing that Microsoft lost $3.1 billion of its net income to account for its share of OpenAI losses, potentially suggests that the ChatGPT maker might have lost approximately $11.5 billion in the quarter that just ended.
While Microsoft declined to comment on the matter, it confirmed to The Register that the $3.1 billion loss reflected in the report represents its current fiscal year, which started on July 1 and ran to Sept 30.
FAQ
Is OpenAI a profitable company?
Despite holding a significant lead in the competitive AI landscape, the company seemingly continues to struggle with its finances, often leaning on investors to keep its operations afloat through rounds of funding — recently pushing its market capitalization to $500 billion.
How much revenue does OpenAI generate annually?
Amid claims that the AI firm is on the verge of bankruptcy, a report suggested that OpenAI generates up to $2 billion annually from ChatGPT and an additional $ 1 billion from LLM access fees, translating to approximately $3.5 billion and $4.5 billion annually.
How does OpenAI spend its money?
The AI startup reportedly spends $7 billion on training its AI models and $1.5 billion on staffing despite generating only approximately $3.5 billion in revenue.
Kevin Okemwa is a seasoned tech journalist based in Nairobi, Kenya with lots of experience covering the latest trends and developments in the industry at Windows Central. With a passion for innovation and a keen eye for detail, he has written for leading publications such as OnMSFT, MakeUseOf, and Windows Report, providing insightful analysis and breaking news on everything revolving around the Microsoft ecosystem. While AFK and not busy following the ever-emerging trends in tech, you can find him exploring the world or listening to music.
You must confirm your public display name before commenting
Please logout and then login again, you will then be prompted to enter your display name.
