Microsoft just revealed that OpenAI lost more than $11.5B last quarter

Satya has also delivered Sam most of the cash he promised

updated Microsoft reported earnings for the quarter ended Sept. 30 on Wednesday after market close and buried in its financial filings were a couple of passages suggesting that OpenAI suffered a net loss of $11.5 billion or more during the quarter.

Let's look first at page 9 of the official earnings filing with the US Securities and Exchange Commission, which includes the following passage:

We have an investment in OpenAI Global, LLC (“OpenAI”) and have made total funding commitments of $13 billion, of which $11.6 billion has been funded as of September 30, 2025. The investment is accounted for under the equity method of accounting, with our share of OpenAI’s income or loss recognized in other income (expense), net.

That second sentence is important. This isn't mark-to-market accounting, where it takes the presumed value of the investment based on what the market currently says it's worth (that value is a staggering $135 billion) and marks it up or down from its initial investment. This is equity accounting, where OpenAI's gains or losses directly affect Microsoft's net income on its income statement. This is how finance types account for a large but non-controlling stake in another company.

Further along, on page 33, the following appears:

Current year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $3.1 billion and $0.41, respectively. Prior year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $523 million and $0.07, respectively.

Finally, there's another SEC document containing relevant information from Tuesday's announcement that OpenAI had finalized its transition into a for-profit (optimistic!) company, in which it was revealed that Microsoft is now the owner of a 27 percent stake in the AI upstart.

If Microsoft owns 27 percent of OpenAI, it stands to reason under equity accounting that it bears 27 percent of OpenAI’s losses. Microsoft’s admission that it shaved $3.1 billion off its net income to account for its share of OpenAI losses therefore suggests OpenAI lost about $11.5 billion during the quarter. Microsoft declined to comment beyond confirming that the $3.1 billion loss "this year" referred to Microsoft's current fiscal year, which started July 1, not the calendar year. So that's a quarterly loss, not a nine-month loss.

In fact, the loss might have been even larger. If you look at page 37 of the SEC filing, it shows that Microsoft's net loss net of tax was $3.1 billion, but its net loss not including tax was actually $4.1 billion. Moreover, the Wall Street Journal reports that Microsoft's share of OpenAI during the quarter – before the conversion of OpenAI to a for-profit – was 32.5%, not 27%. If you do the math with those two numbers, you end up with a quarterly loss of more than $12 billion.

That’s a humongous number for OpenAI given it reportedly generated only $4.3 billion in revenue for the first half of the year, but a sum that won’t hurt Big Daddy Redmond too much given it earned $27.7 billion in net income in the last quarter alone.

Which is a good reminder that Big Tech is funding the AI bubble and there's plenty of money still left to go around before it pops.

OpenAI did not immediately return a request for comment, but we're sure if we got this wrong we'll hear from them.

One more thing: I believe that $11.6 billion funding number is also new – Microsoft had previously noted the amount of its commitment to OpenAI, but not how much it had actually funded. ®

Updated on Oct 31 at 2031 GMT to reflect Microsoft's loss on OpenAI not including tax and its reportedly larger stake in OpenAI. The headline was also adjusted accordingly.