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Microsoft and OpenAI strike non-binding deal to enable restructuring

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Microsoft and OpenAI announced on Thursday that they have signed a non-binding agreement to redefine their partnership, paving the way for OpenAI to restructure into a for-profit company. The move would allow the ChatGPT creator to adopt a more conventional governance model, raise capital more freely, and potentially pursue an eventual IPO.

While details of the new commercial terms were not disclosed, both companies said they are working toward a definitive agreement. The talks mark a major shift in one of the most closely watched partnerships in the AI sector, forged to fuel the global boom in generative AI.

Microsoft has invested $11 billion in OpenAI since 2019 and until recently enjoyed exclusive rights to market OpenAI’s tools through its Azure cloud platform. But the dynamic has shifted: OpenAI has launched its own Stargate data center project, signed $300 billion in contracts with Oracle, and struck another cloud deal with Google, signaling its desire to diversify partnerships and reduce reliance on Microsoft.

For its part, Microsoft wants to preserve access to OpenAI’s technology even if OpenAI claims to reach artificial general intelligence (AGI) — a threshold that under current terms would end the partnership.

OpenAI is targeting a $500 billion valuation, with its nonprofit arm set to receive more than $100 billion, according to chairman Bret Taylor. The conversion still requires approval from attorneys general in California and Delaware, and OpenAI risks losing billions in tied funding if it fails to finalize the transition by year-end.

The evolving relationship underscores the growing competitive tension between the two. Microsoft is developing its own AI models to reduce dependency, while both companies continue to compete in enterprise tools and consumer-facing chatbots.

Oracle Shares Hit Record High as AI Cloud Demand Boosts Revenue Outlook

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Oracle shares surged 14% on Thursday, crossing the $200 mark for the first time, after the company raised its annual revenue forecast fueled by strong demand for its AI-related cloud services.

Despite ongoing geopolitical tensions and warnings from analysts about potential impacts of U.S. President Donald Trump’s tariffs on Big Tech’s AI investments, confidence in the software sector remains robust.

Oracle recently announced a joint venture called Stargate aimed at providing large-scale computing power to OpenAI, positioning itself as a key player in AI infrastructure.

Michael Ashley Schulman, partner at Running Point Capital Advisors, described Oracle’s transformation as moving from a “stodgy” image to a “cloud-native mage” competing in a fiercely contested market.

For fiscal 2026, Oracle expects total revenue to reach at least $67 billion, according to CEO Safra Catz during a post-earnings call.

The company reported cloud services quarterly revenue growth of 14% to $11.7 billion, with overall revenue of $15.9 billion surpassing estimates of $15.59 billion. Following these results, at least nine brokerages have raised their price targets.

Oracle’s forward price-to-earnings ratio stands at 25.86, lower than rivals Microsoft’s 31.34 and Amazon’s 31.80. Year-to-date, Microsoft’s stock has risen 12.16%, while Amazon’s has fallen 2.8%.

Analysts at Piper Sandler noted that Oracle is experiencing a wave of enterprise popularity unseen since the internet boom of the late 1990s.

At the close, Oracle shares were trading at $201.38.

AI Takes Center Stage at Microsoft’s Developer Conference Amid Profit Push

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Microsoft’s Developer Conference Highlights AI Strategy and Profit Goals

Microsoft kicked off its annual developer conference in Seattle on Monday, gathering thousands of software developers eager to transform the company’s extensive artificial intelligence investments into tangible, revenue-generating tools. The focus of this year’s event is squarely on monetizing AI—turning years of research and infrastructure development into products and services for both consumers and enterprises.

The tech giant, based in Redmond, Washington, has already invested a staggering $64 billion this year—much of it funneled into data centers that support AI-powered features like Copilot, which is integrated into Microsoft 365 applications. Its deep partnership with OpenAI, the creator of ChatGPT, remains central to its strategy, even as the dynamics of that relationship begin to shift.

There are growing indications that Microsoft is recalibrating its role in the AI ecosystem. Despite its close ties with OpenAI, Microsoft recently allowed the AI firm to collaborate with Oracle on the ambitious “Stargate” data center project in Texas. This move suggests Microsoft is positioning itself more as a platform provider—a “neutral arms dealer” in the intensifying AI race—rather than maintaining exclusive strategic control.

CEO Satya Nadella has also emphasized efficiency, stating that once an AI algorithm is refined, performance improvements can drive down computing costs significantly—up to tenfold. This efficiency is key as demand for AI services hosted on Microsoft’s Azure cloud continues to rise. According to Cantor Fitzgerald analyst Thomas Blakey, Microsoft is increasingly retaining AI services within its own data centers, giving it tighter control over cost, performance, and profitability.