Microsoft (MSFT) is on a tear in 2025. With its stock up 15% year-to-date—far outpacing the broader S&P 500’s modest 2% gain—Wall Street is clearly bullish.
The driving force? A boom in artificial intelligence, and Microsoft's Azure cloud platform is at the center of it.
Businesses are racing to adopt AI tools, and Azure, thanks to its deep integration with OpenAI’s models, has become the go-to platform for many. This AI-powered momentum is showing up in the numbers. Azure’s revenue is growing at a double-digit clip, with AI services now making up roughly half of that growth. Microsoft’s earlier bet on AI—most notably its multibillion-dollar investment in OpenAI—is paying off handsomely.
Revenue, Valuation, and Margin Expansion
Microsoft’s financial engine is running strong. Since 2022, annual revenue has jumped from around $198 billion to $270 billion—an increase of more than a third. Meanwhile, the company’s price-to-sales multiple has expanded from 9 to 13.3, reflecting investor confidence in sustained growth. That’s a nearly 50% jump in valuation on sales alone.
The shift to recurring revenue has also played a role. Subscriptions like Microsoft 365 and Teams are not only sticky—they’re also proving increasingly profitable. Operating margins have expanded more than 300 basis points since 2022, giving Microsoft more breathing room to fund aggressive cloud and AI development without hurting profitability.
OpenAI, A Billion-Dollar Partnership in Flux
Yet not everything is smooth sailing. Behind the scenes, Microsoft’s partnership with OpenAI—the startup behind ChatGPT—is entering a tense new phase.
Since 2019, Microsoft has invested over $13 billion in OpenAI and currently holds rights to sell its models through Azure and collect 20% of OpenAI’s revenue up to $92 billion. But OpenAI now wants to convert into a public benefit corporation, a shift that could attract up to $40 billion in new funding from backers like SoftBank (SOFI). That reorganization, however, can’t happen without Microsoft’s approval—and the tech giant is reluctant to give up its commercial advantages.
Talks between the two firms are reportedly turning heated. Microsoft may be willing to walk away from the partnership if terms aren’t favorable. Meanwhile, OpenAI has floated the idea of lobbying regulators or even accusing Microsoft of antitrust violations if negotiations break down. The outcome of this high-stakes standoff could reshape how AI infrastructure is built—and who controls it.
Still a Top-Tier Tech Bet
Microsoft has doubled its stock price since early 2023, buoyed by strong AI adoption, cloud dominance, and smart strategic bets. The path forward isn’t without challenges—from geopolitical shocks to rising capital expenditures—but Microsoft’s business model is built for resilience.
Even as the OpenAI drama unfolds, Microsoft is hedging its bets by developing its own AI models and expanding partnerships beyond the current ecosystem. With over $13 billion in annual AI revenue and a dominant cloud presence, Microsoft continues to look like a stock that’s not just keeping up with the future—but defining it.
Microsoft has doubled its stock price since early 2023, buoyed by strong AI adoption, cloud dominance, and smart strategic bets. The path forward isn’t without challenges—from geopolitical shocks to rising capital expenditures—but Microsoft’s business model is built for resilience.
Even as the OpenAI drama unfolds, Microsoft is hedging its bets by developing its own AI models and expanding partnerships beyond the current ecosystem. With over $13 billion in annual AI revenue and a dominant cloud presence, Microsoft continues to look like a stock that’s not just keeping up with the future—but defining it.
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