Microsoft's OpenAI bet may finally pay off with a 30% equity stake in the ChatGPT maker's for-profit arm — worth $150 billion

Microsoft stands as OpenAI's largest backer with a $13.5 billion stake in the nonprofit AI research lab. Over the past few years, the tech giant has been scrutinized for making this huge investment, raising concern among investors since it has been difficult to establish a clear path to profitability in the ever-evolving landscape of artificial intelligence.

Recently, several reports have emerged citing tension between Microsoft and OpenAI, especially after the latter announced its plans to evolve into a for-profit entity before the end of 2025. If the ChatGPT maker fails to meet this threshold, it could lose investor funding, and perhaps worse, subject itself to hostile takeovers and outsider interference.

A separate report revealed that Microsoft is holding its blessings, deterring OpenAI's plans to evolve into a for-profit venture. However, the software giant dismissed the claims, further highlighting that it was ready to walk away from the high-stakes negotiations and ride out the rest of the partnership through 2030.

Others suggest that OpenAI would prematurely declare AGI to sever its ties with Microsoft. If this is the case, Microsoft would be left with the shorter end of the stick, barely getting any returns from its massive investment. But as it now seems, there might be a light at the end of the tunnel.

After OpenAI and Microsoft recently signed a non-binding memorandum of understanding (MOU) for the next phase of their multibillion-dollar partnership, the former's plans to evolve into a for-profit entity are seemingly now moving forward. According to analysts at BNP Paribas, Microsoft could potentially get a new equity stake in OpenAI, which could be worth up to $150 billion (via Business Insider).

If this deal moves forward, it has the potential of becoming the most profitable investment in history with lucrative returns in a short span of time, considering Microsoft first made its first investment in OpenAI in 2019, worth $1 billion, followed by an additional $13 billion shortly after ChatGPT launched. If OpenAI successfully evolves into a for-profit entity, Microsoft will likely get a huge stake in the new business.

What's more, OpenAI will be well-positioned to provide traditional stock to its investors, which will allow it to raise more money to facilitate its cloud compute needs, designed to bolster its sophisticated AI advances. At least, this is all based on the assumption that the AI firm’s market valuation is $500 billion, with Microsoft acquiring a 30% equity stake in the new for-profit entity.