Microsoft Anticipates $1.5 Billion Revenue Decline Due To OpenAI Losses

According to Odaily, Microsoft CFO Amy Hood announced on Wednesday that the company expects a $1.5 billion revenue decline this quarter, primarily due to anticipated losses from OpenAI. Microsoft has invested nearly $14 billion in OpenAI, which is currently experiencing significant financial losses. Earlier this month, The Information reported that OpenAI is projected to incur a $5 billion loss this year, with revenues of $4 billion, excluding stock-based compensation. Hood explained that for Microsoft, this loss is accounted for using the equity method. A Microsoft spokesperson clarified that this accounting method reflects a company's share of the profits or losses of an investee during a given period. The spokesperson also emphasized that the additional details are not due to any changes in Microsoft's relationship or investment with OpenAI. The collaboration between the two companies continues to yield results, as they develop differentiated intellectual property and drive revenue growth momentum. Despite OpenAI being a central part of Microsoft's growth strategy, the company has been mitigating risks associated with integrating OpenAI's models into various products and serving as the exclusive cloud infrastructure provider for the startup. On Tuesday, Microsoft's GitHub subsidiary announced that it would allow developers to use models from Google or the startup Anthropic to support the Copilot Chat feature, instead of relying solely on OpenAI's GPT-4.