OpenAI Reorg Raises Microsoft AI Costs, Risks

Microsoft beat Wall Street estimates for the fiscal quarter, reporting roughly $77.7 billion in revenue and stronger-than-expected profit with cloud driving results and Azure revenue up about 40%. Management guided current-quarter Azure growth near 37% and said the company spent nearly $35 billion on capital expenditures this quarter — largely on AI chips and data-center capacity — with capex set to accelerate into 2026. In October 2025 OpenAI reorganized its for‑profit arm as a public benefit corporation valued at about $500 billion, gave the OpenAI Foundation a controlling equity stake of roughly $130 billion and committed $25 billion to healthcare research and AI cybersecurity, a move that reduced Microsoft’s stake from 32.5% to about 27% but preserved guaranteed commercial access to OpenAI models through 2032. The restructuring also anchored reports that OpenAI committed about $250 billion to buy Azure services, while Microsoft said OpenAI-related activity produced multibillion‑dollar hits to earnings (reported between $3.1 billion and $4.1 billion). Analysts warned AI capex could consume an outsized share of operating cash flow — in some projections as high as roughly 94% in 2025–26 — and investors reacted nervously; Microsoft also suffered a high-profile Azure/Office outage that appeared linked to a cyberattack. OpenAI faces regulatory and legal scrutiny, including an FTC probe and a wrongful‑death lawsuit, underscoring safety and policy risks as the companies scale generative AI into sensitive areas like healthcare.