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Microsoft logs $3.2B from Anthropic investment, but OpenAI was a mixed bag
Microsoft reported a $3.2B gain from its investment in Anthropic during Q4 of fiscal 2026, significantly boosting earnings, while its investment in OpenAI saw a $600M decline. Microsoft still enjoyed a profitable quarter with $90B in revenue. For the fiscal year, OpenAI generated a $5B gain, but the quarterly results highlight the volatility of AI investments amidst competition.
Key points
- Microsoft's investment in Anthropic resulted in a $3.2 billion gain in Q4 of fiscal 2026, enhancing earnings per share (EPS) by a notable margin.
- Anthropic entered a circular agreement with Microsoft to purchase $30 billion in Azure services, influencing the increase in the investment's value.
- In contrast, Microsoft marked down its investment in OpenAI by $600 million, reducing diluted EPS by 7 cents per share.
- Despite the loss on OpenAI, Microsoft's overall financial performance for Q4 included $90 billion in revenue and $35.8 billion in net income.
- For the entire fiscal year, OpenAI yielded a $5 billion gain contributing $0.67 to EPS, suggesting a more stable long-term investment compared to Anthropic.
Why it matters
- Microsoft's investments reflect broader trends in AI development and competitive positioning among major players like Google and Amazon.
- The contrasting financial impacts of Anthropic and OpenAI investment hint at the volatility and risks associated with AI startups.
- As AI continues to evolve, the importance of cloud services like Azure for AI firms might become more pronounced, influencing Microsoft's future investment strategies.
Microsoft's Q4 results showcase the mixed fortunes of AI investments, with strong gains from Anthropic boosting short-term earnings while highlighting the potential volatility in its relationship with OpenAI.