Redmond, Washington — The partnership between Microsoft and OpenAI, the driving force behind the generative AI boom, has taken a surprising turn with newly revealed financial figures that stunned even the most optimistic analysts. According to Microsoft’s quarterly report for the period ending September 30, 2025, OpenAI recorded a net loss exceeding $11.5 billion during the quarter.
The figure was “hidden” in the documents Microsoft filed with the U.S. Securities and Exchange Commission (SEC), but it quickly drew attention from journalists and investors due to the massive gap between OpenAI’s revenue and its soaring operational costs.
How the Loss Was Identified
On page 9 of Microsoft’s official filing, one key passage reads:
“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.”
This statement reveals how the loss was detected. Unlike the mark-to-market method, which adjusts an asset’s value to its current market price, the equity method directly reflects the profits or losses of the invested company on the investor’s balance sheet. In other words, when OpenAI loses money, part of that loss appears in Microsoft’s own financial results based on its ownership stake.
Further down, on page 33, the document adds:
“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.”
If Microsoft holds 27% of OpenAI’s shares—a percentage confirmed after its conversion into a Public Benefit Corporation—then the $3.1 billion recognized loss represents roughly 27% of OpenAI’s total deficit. That calculation implies a net loss of around $11.5 billion for the startup in just one quarter.
It Could Be Even Higher
Some analysts, including Matt Rosoff, argue that the real figure might be higher. Page 37 of the report suggests that Microsoft’s pre-tax loss related to OpenAI was actually $4.1 billion, not $3.1 billion.
Before OpenAI’s corporate restructuring, Microsoft’s ownership was 32.5%, not 27%. If that higher percentage is applied, the total loss could surpass $12 billion in just three months—almost equal to the annual revenue of tech giants like Adobe or SAP.
For context, OpenAI reportedly generated $4.3 billion in revenue in the first half of 2025, but spent roughly $6.7 billion on research and infrastructure alone. That makes a quarterly loss of $11 billion plausible, confirming the unprecedented scale of its investments to sustain the growth of models such as GPT-5 and GPT-Enterprise.
Why Microsoft Isn’t Worried
Despite the staggering number, Microsoft remains largely unfazed. The company posted $27.7 billion in net income during the same quarter, easily absorbing the impact.
Moreover, the partnership with OpenAI is designed for the long term. In October 2025, the companies signed what Microsoft called “the next phase of the partnership,” a deal that strengthens their collaboration. The new agreement includes:
- Confirmation that Microsoft owns 27% of OpenAI Group PBC, now valued at $135 billion;
- Extended intellectual property (IP) rights for Microsoft over OpenAI’s models through 2032, including any developed after achieving artificial general intelligence (AGI);
- OpenAI’s commitment to purchase $250 billion in Azure services over the coming years.
Through these terms, Microsoft ensures massive cloud revenue even if OpenAI continues to operate at a loss, solidifying Azure’s role as the backbone of the world’s leading AI ecosystem.
The Cost of Leading the AI Race
OpenAI’s business model relies on heavy research spending, massive scalability, and immense hardware investments—especially in NVIDIA chips and distributed training clusters.
A Reuters report estimated that operating ChatGPT and OpenAI’s enterprise models costs Microsoft over $1 billion per month, covering data centers, energy, storage, and engineering teams. It’s the kind of infrastructure one might expect from a “future Google,” but it remains far from profitable.
Even so, OpenAI’s growth is accelerating. The company is projected to reach $13 billion in revenue by the end of 2025, nearly triple the previous year’s figure. But its burn rate—the money spent to sustain growth—remains enormous.
The revelation that OpenAI lost more than $11.5 billion in a single quarter reignites debate over the sustainability of the AI race. Investors now face a paradox: generative AI has become the greatest driver of technological innovation in decades, yet it still fails to produce profits that match the scale of its ambitions.
Despite multimillion-dollar deals with companies like Apple, Salesforce, and Oracle, the costs of training and maintaining large language models continue to rise exponentially—underscoring both the promise and peril of leading the global AI revolution.
Source: DioLinux
