Nearly 70% of Microsoft's AI business is tied to OpenAI — and it's becoming a problem

Microsoft's positive quarterly financial report beat Wall Street expectations, with shares rising nearly 30%, demonstrating fast-growing AI business and healthy cash flows despite heavy data center investments. However, disclosed information indicates that OpenAI products account for about 70% of Microsoft's AI-related revenue, with GPU and infrastructure consumption by OpenAI services making up 65-70% of its AI business. Microsoft has sold several million paid licenses for its AI assistant Copilot for Microsoft 365, but the dependency on OpenAI remains a concern. The article draws parallels with Spotify's model of sustained losses, noting that Microsoft and other OpenAI creditors bet on ChatGPT becoming a fundamental standard, but alternatives like Anthropic Claude or Google Gemini could prevail, or political will could curb the data center boom. If OpenAI collapses or slows, Microsoft faces billions in losses and excess data center capacity. Microsoft is attempting to diversify by developing its own efficient MAI models for consumer apps and expanding their corporate deployment, while also focusing on traditional segments like Xbox and Windows, but if the AI bubble bursts, nothing will save the company or its shareholders.