TLDR
- Wedbush’s Daniel Ives labels the renegotiated OpenAI partnership as a “net positive” for Microsoft
- OpenAI’s payments to Microsoft will reach approximately $6 billion in 2025, versus the earlier $4 billion estimate
- MSFT secures intellectual property rights to OpenAI technology through 2032 while maintaining equity ownership
- TD Cowen maintains Buy recommendation with $540 target, highlighting Azure’s growth trajectory
- Microsoft shares currently at $409.43, declining 15% in 2025, with Strong Buy consensus among analysts
A renegotiated partnership agreement between Microsoft and OpenAI has captured Wall Street’s attention, with analysts viewing the revised terms favorably.
Under the new arrangement, OpenAI has agreed to a $38 billion ceiling on total revenue-sharing payments to Microsoft extending through 2030. This replaces the previous framework that potentially exposed Microsoft to significantly higher aggregate payments over the long term.
The updated agreement also permits OpenAI to offer its models via competing cloud platforms—including AWS, Google Cloud, and Oracle—diminishing Microsoft’s previous exclusivity advantages.
Daniel Ives from Wedbush Securities characterized the restructured agreement as “a net positive” for Microsoft. He elevated his price objective on MSFT shares to $575, suggesting approximately 42% potential upside from present levels, while maintaining his Outperform recommendation.
Shares are currently trading at $409.43, representing a 15% decline year-to-date.
Microsoft’s Benefits Under the Revised Terms
The primary transformation involves payment timing. Microsoft will now collect approximately $6 billion from OpenAI during the current year, up from the previously anticipated $4 billion. This acceleration results from eliminating OpenAI’s option to postpone certain payments until 2032.
Microsoft has also secured intellectual property rights to OpenAI’s models and technology through 2032, independent of when artificial general intelligence might be formally recognized. According to Ives, this eliminates an “open-ended risk” that existed in the previous framework.
Additionally, Microsoft will no longer need to split revenue with OpenAI on Azure sales involving OpenAI models to enterprise cloud customers. Ives identified this as removing a “meaningful drag” on Azure’s AI monetization potential.
Microsoft preserves its equity stake in OpenAI, maintaining exposure to potential gains ahead of a prospective public offering.
“Microsoft is reducing its dependency on a single highly concentrated commercial arrangement while maintaining strategic alignment with OpenAI,” Ives said.
Azure Growth Momentum Building
In a separate development, TD Cowen reaffirmed its Buy rating on MSFT with a $540 price objective following virtual discussions with Microsoft’s investor relations leadership.
The firm highlighted that Microsoft anticipates remaining capacity-constrained through at least late 2026. However, efficiency improvements have unlocked additional compute resources, with Microsoft allocating more capacity toward Azure operations.
Microsoft projects Azure growth will accelerate during the latter half of 2026. Faster deployment of its Fairwater data center infrastructure has contributed, alongside a $30 billion commitment announced in November 2025 to develop capacity for Anthropic—creating a new AI workload revenue stream beyond OpenAI.
Copilot adoption momentum strengthened in the most recent quarter. Microsoft anticipates higher net subscriber additions in the June quarter compared to the approximately 5 million gained in March. Growth catalysts include the now-available E7 bundle and the forthcoming Copilot Cowork offering.
For GitHub Copilot, Microsoft implemented per-user-plus-consumption pricing to enhance monetization of expanding agentic usage patterns.
Across Wall Street, MSFT has accumulated 32 Buy ratings and 2 Hold ratings, resulting in a Strong Buy consensus. The average 12-month price target stands at $559.98, suggesting roughly 37% upside potential from current trading levels.
Meanwhile, Microsoft-owned LinkedIn is preparing workforce reductions affecting approximately 5% of employees as part of a restructuring initiative, Reuters reported.
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