Microsoft and OpenAI now in open relationship

Kim Khan· Host0:00

[intro music] Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis. Good afternoon. Today is Monday, April twenty-seventh, and I'm your host, Kim Khan. Our top story so far: From Redmond and beyond for OpenAI. Microsoft shares were under pressure after the company and OpenAI amended their partnership agreement, making Microsoft's OpenAI license non-exclusive. Under the revised terms, Microsoft remains OpenAI's primary cloud partner, and OpenAI products will continue to launch on Azure first. However, if Microsoft cannot and chooses not to support the necessary capabilities, OpenAI is now free to seek alternative providers. OpenAI can also bring its products to customers across other cloud platforms, including Amazon Web Services. Microsoft will retain a license to use OpenAI's intellectual property through twenty thirty-two, but that license is no longer exclusive. As part of the updated deal, Microsoft will stop paying revenue share to OpenAI, though it will continue to receive revenue share payments from OpenAI through twenty-thirty. Seeking Alpha analyst Julia Ostian said the estimated forty-five percent of Microsoft's AI backlog tied to OpenAI represents a major risk. Still, she suggested those concerns may already be reflected in the stock. "The market didn't fully believe OpenAI would be able to pay for the previously agreed capacity, and for this reason, I don't see this piece of news as majorly negative," Ostian said. Separately, OpenAI is reportedly working with Qualcomm and MediaTek on smartphone processors with Luxshare