Microsoft Filing Reveals OpenAI’s $11.5 Billion Quarterly Loss

TL;DR: Microsoft’s SEC filing for Q1 fiscal year 2026 disclosed that its investment in OpenAI resulted in a $3.1 billion decrease in net income. Based on Microsoft’s 27% ownership stake, this indicates OpenAI experienced approximately $11.5 billion in quarterly losses. The filing also confirmed Microsoft has funded $11.6 billion of its $13 billion total commitment to OpenAI as of 30 September 2025.

Financial Disclosure Through Equity Accounting

Microsoft’s earnings documentation stated: “net losses from investments in OpenAI…resulted in a decrease in net income and diluted EPS of $3.1 billion.” This disclosure emerged through equity accounting methods rather than mark-to-market valuation, providing insight into OpenAI’s operational performance.

With Microsoft holding a 27% stake in OpenAI, the $3.1 billion impact translates to approximately $11.5 billion in total quarterly losses for the AI company.

Investment Status

The SEC filing confirmed Microsoft has deployed $11.6 billion of its $13 billion investment commitment to OpenAI, leaving approximately $1.4 billion remaining. This substantial funding comes despite ongoing quarterly losses and represents Microsoft’s continued confidence in OpenAI’s long-term strategic value.

Revenue vs Expenditure Gap

The disclosed losses present a stark contrast to OpenAI’s revenue generation. Reports indicate the company earned approximately $4.3 billion during the first half of 2025, suggesting significant operational expenses and infrastructure costs are driving the quarterly losses.

This expenditure pattern aligns with broader industry trends, where major AI companies are investing heavily in compute infrastructure, research talent, and model development ahead of revenue realisation.

Microsoft’s Absorption Capacity

Despite the $3.1 billion reduction in net income from its OpenAI investment, Microsoft reported total quarterly net income of $27.7 billion. The company’s ability to absorb these losses whilst maintaining substantial profitability demonstrates the financial capacity of major technology companies to sustain AI development investments during pre-profitability phases.

Microsoft CFO Amy Hood indicated that the company will exclude impacts from its OpenAI investment in future financial outlooks, acknowledging the partnership’s ongoing volatility.

Strategic Context for UK Businesses

This disclosure reveals several considerations for UK organisations evaluating AI partnerships:

  1. Investment Timeframes: Major AI providers remain in high-growth, pre-profitability phases despite significant revenue generation
  2. Sustainability Questions: The gap between revenue and expenditure raises questions about when AI companies will achieve sustainable unit economics
  3. Partnership Stability: Microsoft’s willingness to absorb substantial losses indicates commitment, but also highlights relationship volatility

Businesses should recognise that even well-funded AI providers face substantial operational challenges whilst scaling infrastructure and capabilities. Long-term AI strategies should account for potential provider consolidation or service changes as companies navigate the path to profitability.

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