Microsoft and OpenAI sign a deal allowing OpenAI to restructure into a public benefit corporation (PBC), valuing OpenAI at $500 billion. Microsoft will hold 27% of OpenAI Group PBC, amounting to about $135 billion.
On Tuesday, Microsoft and OpenAI reached a landmark deal that will transform OpenAI into a public benefit corporation (PBC). This move increases the company’s valuation to an impressive $500 billion and opens the door for a future public listing.
Under this new structure, Microsoft will hold a 27% stake in OpenAI Group PBC, worth about $135 billion. However, OpenAI will still be controlled by its nonprofit parent organisation, the OpenAI Foundation, ensuring it retains oversight of the company’s operations and vision.
This deal resolves OpenAI’s long-standing challenge of being a nonprofit while also developing cutting-edge AI technology. It gives OpenAI greater freedom to raise capital, which had previously been limited by its nonprofit structure. OpenAI was founded as an AI safety-focused nonprofit, but had been constrained in attracting the capital needed to scale its operations.
“OpenAI has completed its recapitalisation, simplifying its corporate structure,” said Bret Taylor, chair of the OpenAI Foundation. “The nonprofit remains in control of the for-profit, and now has a direct path to major resources before AGI arrives.”
Microsoft has invested $13.8 billion into OpenAI, and this restructuring deal implies that Microsoft’s return on investment could be nearly ten times its original stake. As part of the agreement, OpenAI will purchase $250 billion worth of Azure cloud computing services from Microsoft, continuing their close partnership well into the future.
Despite the restructuring, Microsoft will retain some rights over OpenAI’s AI models and products, particularly as OpenAI progresses towards artificial general intelligence (AGI). This crucial point is where AI systems can match the cognitive abilities of a well-educated human adult. However, the new deal requires an independent panel to verify whether OpenAI has truly reached AGI.
In the agreement, Microsoft will no longer have the right of first refusal to provide computing services to OpenAI, though it will still be OpenAI’s primary cloud partner. Additionally, Microsoft will not hold rights to hardware produced by OpenAI, which is notable after OpenAI’s March 2025 acquisition of io Products, a company founded by former Apple design chief Jony Ive, for $6.5 billion.
This restructuring marks a pivotal moment for both companies as they position themselves for the future of AI development. For OpenAI, the new corporate structure offers greater flexibility and access to resources, accelerating its progress towards AGI while keeping its mission to ensure AI development remains aligned with ethical and safety concerns.
For Microsoft, the deal secures its leadership in the AI cloud services market and deepens its ties with OpenAI, reinforcing its dominant role in the AI space.
According to Gil Luria, head of technology research at DA Davidson, this deal provides much-needed clarity on OpenAI’s investment path and ownership rights, making it easier for the company to raise funds in the future. By moving away from its nonprofit origins, OpenAI can now focus on expanding its reach while continuing to innovate and evolve AI technologies that could transform industries across the globe.
As the AI race intensifies, this deal marks the beginning of an exciting new chapter for both OpenAI and Microsoft, as they jointly prepare for the next phase in artificial intelligence development.
