Microsoft has conceded more ground to OpenAI in win for Amazon, says UBS Proactive uses images sourced from Shutterstock
Microsoft Corp (NASDAQ:MSFT) appears to have conceded more ground to OpenAI in a revised partnership that reshapes the balance of power in artificial intelligence, according to UBS, even as the broker keeps a positive stance on the stock.
The Swiss bank said the latest agreement – the third major revision in 16 months – allows OpenAI to host its products across rival cloud providers, effectively ending Microsoft’s exclusivity and opening the door to competitors such as Amazon Web Services.
UBS said this change “appears to be a major win for Amazon.com Inc (NASDAQ:AMZN)” and “tough to describe… as anything but a negative for Microsoft”, highlighting a broader shift as both companies pursue diversification.
The move seems to reflect practical constraints. OpenAI needs more computing power and distribution than Microsoft alone can provide, while Microsoft is increasingly building its own artificial intelligence models and allocating capacity elsewhere.
Other changes are more mixed. Microsoft will no longer pay a revenue share to OpenAI, which could lift Azure growth in the near term, but future payments from OpenAI will now be capped and end in 2030, limiting upside.
Microsoft is estimated to have an economic interest equivalent to around 25% of OpenAI, though it does not hold a conventional equity stake. Because OpenAI uses a capped-profit structure, Microsoft’s position is based on profit participation rights, not ordinary shares, capped over time and tied to its funding rounds and commercial agreements.
UBS also noted the absence of any new cloud spending commitments from OpenAI, which may signal a shift towards multi-cloud strategies.
Despite this, UBS retains a ‘buy’ rating and a $510 price target, arguing the shares remain “reasonably-priced” and that longer-term growth from Azure and AI services should underpin the investment case.