Microsoft and OpenAI aren't breaking up. But they're not exclusive anymore.

By William Gavin

The companies agreed to a deal that they said gives them more flexibility. As part of it, Microsoft will stop sharing its revenue.

Microsoft and OpenAI have been partners for years, but the companies have also relaxed restrictions on their relationship.

Microsoft's relationship with OpenAI is being shaken up, giving the ChatGPT maker more flexibility as it eyes a potential initial public offering.

The companies said on Monday that they had amended their agreement to give each party the "flexibility to pursue new opportunities." As part of that, Microsoft (MSFT) will be OpenAI's primary cloud partner, but OpenAI can also serve all of its products to customers across other cloud providers' platform.

And Microsoft, which has a roughly 27% stake in the AI lab and will remain a major shareholder, gets to keep its license to OpenAI's models and products through 2032. But that license will now be nonexclusive.

Microsoft will also stop giving the ChatGPT maker a share of its revenue, although OpenAI is still on the hook for revenue-share payments through 2030. Those payments will be capped at an undisclosed amount, Microsoft said.

An earlier agreement entitled Microsoft to a share of OpenAI's revenue and exclusive intellectual-property rights until the AI lab achieved artificial general intelligence.

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"At a high level, the new agreement simplifies the relationship, with Microsoft giving up some exclusivity in exchange for greater clarity, flexibility, and economic certainty," Evercore ISI analysts led by Kirk Materne said in a note to clients on Monday.

The analysts said the new terms shouldn't come as a "major surprise to investors." They pointed out that Microsoft has signaled interest in a more diversified AI strategy, while OpenAI has "clear incentives" to expand its reach.

Evercore rates Microsoft's stock outperform with a $580 price target, implying upside of 38%.

The revised deal comes as OpenAI has been both growing its business and attracting major investment. In March, the company said it was worth $852 billion, was generating $2 billion a month, and had reached "commercial scale" and "mission scale."

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OpenAI has been reported to be eyeing a IPO before the end of the year, as has rival lab Anthropic. In an interview this month, CFO Sarah Friar told CNBC she hopes that "everyone wants to own part of ChatGPT."

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The Microsoft-OpenAI relationship is at the heart of court proceedings set to kick off on Monday with jury selection.

OpenAI, CEO Sam Altman and Microsoft are listed as defendants in former OpenAI co-founder Elon Musk's lawsuit over OpenAI's creation of a "capped profit" subsidiary in 2019. OpenAI in 2025 turned its for-profit business into a public-benefit corporation, or B-Corp, controlled by its nonprofit arm.

"We believe any major damage to OpenAI and Altman will be more scrapes and bruises than real consequences to the company and his role as CEO," Wedbush analyst Dan Ives said in a note to clients on Monday. He warned that, although a settlement is likely, the legal battle will probably be lengthy.

-William Gavin

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04-27-26 1149ET