Latest news with #Azure
Yahoo
5 hours ago
- Business
- Yahoo
Microsoft may abandon OpenAI negotiations
Microsoft is ready to step back from complex talks with OpenAI concerning their multibillion-dollar partnership, as the AI start-up aims to transform into a for-profit organisation, according to a report by the Financial Times. The discussions hinge on key points, including the extent of Microsoft's future ownership in OpenAI, with the tech giant contemplating maintaining its current deal, which extends to 2030, if no agreement is reached, the report said. Insiders familiar with the company's strategy told the FT that the company would continue using OpenAI's technology under existing terms unless a superior alternative is proposed. Nonetheless, both sides are engaging in daily discussions, expressing hope for a resolution. 'We have a long-term, productive partnership that has delivered amazing AI tools for everyone,' Microsoft and OpenAI stated jointly. 'Talks are ongoing and we are optimistic we will continue to build together for years to come.' OpenAI's transition to a for-profit model is vital to secure additional investment and pave the way for a potential stock market debut. Microsoft's consent is needed by the end of 2025 to avoid losing significant funding from backers like SoftBank. The talks have centred on Microsoft's possible equity share in the restructured OpenAI, with figures ranging from 20% to 49% for its $13bn investment so far. The partnership, initiated with Microsoft's $1bn commitment to OpenAI in 2019, is also being reassessed. Currently, Microsoft has sole rights to market OpenAI's models and earns 20% of revenues up to $92bn. Sources told the new agency that Microsoft is hesitant to relinquish its access to OpenAI's technology or its revenue portion. The Wall Street Journal reported that OpenAI considered alleging anti-competitive practices by Microsoft. 'Holding out is Microsoft's nuclear option . . . and they are just making OpenAI sweat,' a source near OpenAI said, noting that OpenAI's intellectual property is crucial for Microsoft to stay competitive against companies like Google and Meta. A source close to Microsoft countered that the company is satisfied with the current agreement and willing to uphold it until 2030. Microsoft has recently broadened its AI approach, integrating xAI's Grok model into its cloud services in May. Additional contract terms under discussion include Microsoft's exclusive rights to distribute OpenAI's software through Azure, its priority to supply computing infrastructure, and access to OpenAI's intellectual property before it achieves 'artificial general intelligence,' a provision likely to be eliminated. OpenAI's leaders, including Sam Altman and Sarah Friar, have highlighted difficulties in obtaining enough computing resources to support ChatGPT's 500 million weekly users and develop new models. Former Microsoft executives noted tensions over OpenAI's requests for quicker access to computing infrastructure. Even if a deal is finalised, it must pass regulatory review in Delaware and California and faces a legal challenge from Elon Musk, supported by ex-OpenAI staff. For OpenAI, an agreement with Microsoft is essential. Investors, including SoftBank, have linked their funding to the for-profit transition. If the shift is delayed or fails, SoftBank could reduce its $30bn investment by $10bn. "Microsoft may abandon OpenAI negotiations" was originally created and published by Verdict, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
7 hours ago
- Business
- Yahoo
Oracle Earnings Impress: Are Cloud Stocks a Buy?
The big banks will really kick the Q2 earnings cycle into a higher gear in a few weeks, but the reality is that earnings season is never 'over'. We've heard from several companies over recent weeks, whose results we'll include as part of the broader Q2 tally. Among the group that have already reported, Oracle ORCL saw a notably strong reaction thanks to its robust results, with shares seeing a strong move higher post-earnings. Up nearly 30% YTD, shares are now outperforming the S&P 500 following the print. Image Source: Zacks Investment Research Let's take a closer look at the release and a few other major cloud players, such as Microsoft MSFT and Amazon AMZN. Concerning headline expectations in the release, sales of $15.9 billion and adjusted EPS of $1.70 both cleared our consensus expectations, reflecting growth rates of 11% and 4.3%, respectively. Below is a chart illustrating the company's sales on a quarterly basis. Image Source: Zacks Investment Research Notably, its remaining performance obligations (RPOs) were up a strong 41% year-over-year, a reflection of the red-hot demand the company has been witnessing. CEO Safra Catz said – 'We expect our total cloud growth rate—applications plus infrastructure—will increase from 24% in FY25 to over 40% in FY26. Cloud Infrastructure growth rate is expected to increase from 50% in FY25 to over 70% in FY26. And RPO is likely to grow more than 100% in FY26. Oracle is well on its way to being not only the world's largest cloud application company — but also one of the world's largest cloud infrastructure companies.' The red-hot demand is also showing up in analysts' current year sales expectations, which have moved considerably higher following the release. As we can see, sales expectations were already trending higher for some time, with the recent commentary cementing the strong outlook. Image Source: Zacks Investment Research Microsoft shares have been strong in 2025 so far, up 14% compared to the S&P 500's 2% gain. Concerning headline figures in its latest release, EPS of $3.46 and sales of $70.0 billion both handily exceeded our consensus expectations, up 13% and 18%, respectively. The technology titan's sales growth continues to be mighty impressive, a common theme among the broader Mag 7 group overall. Image Source: Zacks Investment Research Strength in Microsoft Cloud and AI drove the results, with Microsoft Cloud revenue up 20% year-over-year to $42.4 billion. Demand has remained strong for the tech titan, with the trend expected to continue over the coming years. Importantly, its Intelligent Cloud (includes Azure) revenue totaled a strong $26.8 billion, up 21% from the year-ago period. Amazon's latest set of results also showed solid momentum within AWS, with sales of $29.3 billion in the segment up 17% year-over-year. The growth rates here have been a major focus, giving investors a gauge of whether sales have been decelerating or accelerating. Further, AMZN signed several new AWS deals with companies throughout the period, a list that includes Adobe, Uber, Nasdaq, Ericsson, Cisco, and more. Many businesses have clamored for AWS, and market participants should expect Amazon to ink many more deals in the coming months/years. Below is a chart illustrating AMZN's sales on a quarterly basis. Image Source: Zacks Investment Research Analysts have taken a bullish stance on AMZN's current fiscal year, with the current $6.17 Zacks Consensus EPS estimate up roughly 6% over the past year. The value reflects 12% growth YoY, continuing the titan's growth trajectory. Image Source: Zacks Investment Research Bottom Line Oracle's ORCL recent set of quarterly results, which we count in our broader Q2 tally, were notably strong, enjoying strong growth thanks to snowballing demand. The growth within its remaining performance obligations (RPOs) helps confirm the strong demand. Other major cloud players, including Amazon AMZN and Microsoft MSFT also enjoyed very healthy demand concerning their services throughout their latest periods, further confirming the broader cloud momentum. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Inc. (AMZN) : Free Stock Analysis Report Microsoft Corporation (MSFT) : Free Stock Analysis Report Oracle Corporation (ORCL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
The Hindu
13 hours ago
- Business
- The Hindu
OpenAI and Microsoft: A partnership under strain
A 'head over heels' relationship between a tech titan and an AI startup that began over six years ago is turning sour. Microsoft and OpenAI's pact powered the startup's artificial intelligence engine to build generative pre-trained models and de-aged the software maker for the AI era. Now — after cumulative investments swelling to $13 billion — the couple is battling between mutual reliance and burgeoning autonomy. This recalibration carries weighty implications for both firms. Recent reports suggest Microsoft is prepared to halt discussions over the future contours of its OpenAI alliance if disagreements on critical terms — like Microsoft's future equity stake — persist. The Windows software maker would then rely on its existing commercial contract, ensuring access to OpenAI's technology until marks a potential inflexion point in a relationship that saw Microsoft's capital and cloud infrastructure propel OpenAI to the vanguard of AI. Heart of the matter At the heart of the current negotiations are fundamental differences in strategic outlook. OpenAI has been overtly seeking to lessen its dependency on Microsoft for cloud computing, a move underscored by new partnerships. Notably, OpenAI finalised a deal in May to use Google Cloud's infrastructure, a significant step to diversify its computing resources beyond Microsoft's Azure —its current exclusive provider. It has also partnered with CoreWeave and is exploring arrangements with Oracle as part of Project Stargate to further expand its compute capacity. Such diversification provides OpenAI with technical alternatives and, presumably, greater negotiating leverage. The shifting personal ties between the firms' leaders, Satya Nadella of Microsoft and Sam Altman of OpenAI, mirror these corporate recalibrations. Once in near-constant communication, with Mr. Nadella reportedly texting Mr. Altman five or six times a day, their interactions have become more formalised, primarily consisting of scheduled weekly calls, per news reports. This devolution from spontaneous chats to structured exchange began after Mr. Altman's brief ousting from OpenAI in late 2023 — an event that led Mr. Nadella to rearchitect his company's AI future. While Mr. Nadella backed Mr. Altman, the Microsoft CEO also made his controversial decision to bring DeepMind's Mustafa Suleyman on board. At that point, Mr. Suleyman was running Inflection AI. And as part of the deal, the entire team at Inflection AI joined the software maker. Despite these undercurrents, public pronouncements remained diligently choreographed. Earlier this year, Mr. Altman posted a picture with Mr. Nadella on X, announcing the next phase of their partnership to be 'much better' than anyone is ready for. Mr. Nadella echoed the optimistic sentiment. Such displays were aimed at reassuring investors amidst intricate private negotiations and mounting competition from other AI players, as well as increasing regulatory scrutiny globally. A pivotal point A pivotal point of disagreement between the duo is OpenAI's corporate structure. In May, OpenAI announced it would restructure into a Public Benefit Corporation (PBC), while keeping its non-profit parent in control, retaining the authority to appoint board members . This was a significant shift from earlier considerations of a more conventional for-profit transition that might have diluted the non-profit's oversight and authority. The move, amidst criticism from OpenAI early investor and Tesla CEO Elon Musk, was aimed to better align its operational structure with its stated mission of developing AI for humanity's benefit, while still attracting substantial investment. This restructuring requires Microsoft's assent as a key stakeholder — with the tech giant having provided billions of dollars in funding. Microsoft is said to be negotiating the size of its own potential stake in this new PBC, with discussions reportedly ranging from 20% to 49%. Failure to finalise this restructuring by year-end could jeopardise funding from other investors, including a significant investment from SoftBank. Broader AI strategy Microsoft, for its part, is not standing still. Its AI strategy is visibly broadening beyond its OpenAI relationship. At its Build 2025 conference, Microsoft showcased integrations of models from Anthropic and Musk's xAI, signalling a move towards a more diversified AI portfolio. The company is also developing its own smaller, in-house models, like Phi-4, to reduce costs and reliance on any single provider for its Copilot services. This reflects a growing confidence in its proprietary capabilities and a desire to offer a wider range of AI tools on its Azure platform. Indeed, Microsoft's ability to leverage its existing agreement with OpenAI until 2030 offers it strategic latitude. But the evolving Microsoft-OpenAI dynamic unfolds against a fiercely competitive AI landscape. Both entities are balancing the fruits of their collaboration against the imperatives of strategic independence and market differentiation. Microsoft's potential willingness to pause talks and OpenAI's multi-cloud strategy both signal a relationship that is turning sour. The denouement of these negotiations will not only chart the future courses of the two firms but also establish significant precedents for partnerships, governance, and commercialisation in the rapidly maturing AI domain. The relationship, once a lodestar for AI collaboration, now offers a salient lesson in managing the intricate dance of shared ambition and diverging paths in an industry perpetually remaking itself.
Mint
15 hours ago
- Business
- Mint
Microsoft and OpenAI forged a close bond. Why it's now too big to last.
Once tied at the hip, Microsoft and OpenAI increasingly look like rivals seeking an amicable divorce. But like all separations, it could get messy, and this past week OpenAI indicated it's willing to get down in the mud. When Microsoft and OpenAI first got together in 2019, the most powerful artificial intelligence in the world was literally playing games. AlphaGo from Google's DeepMind lab was the first machine to beat human Go champions, but that's all it did. AI as we know it now was still in its research phase. Venture capital's focus was on cloud and cryptocurrency start-ups, but Microsoft saw something in the nonprofit AI lab called OpenAI, which had just come off a bruising leadership battle that saw Sam Altman prevail over Elon Musk. Without Musk's billions of dollars, OpenAI changed to a bespoke structure in which a for-profit AI lab is controlled by a nonprofit board. Investors' returns were capped at 100 times their stake. The reorganization cleared the way for Microsoft to invest $1 billion in OpenAI in 2019. Those funds fueled the release of ChatGPT in November 2022—the spark to the AI prairie fire that is still spreading. Soon thereafter, Microsoft invested another $10 billion, which supported OpenAI's rapid expansion. Since then, the bills have added up, given the high cost of scaling AI. At first the two companies were symbiotic. All of OpenAI's AI computing is done on Microsoft's Azure cloud. Microsoft has access to all of OpenAI's intellectual property, including its catalog of models that underpin a range of AI services Microsoft offers with its Copilot products. When the OpenAI nonprofit board ousted Altman in a November 2023 coup, Microsoft CEO Satya Nadella backed Altman, a key endorsement that helped restore his post. But the partnership that made so much sense from 2019 to 2023 has now made each company too dependent on the other. OpenAI has large ambitions, and Sam Altman believes it will need unprecedented computing power to get there, more than Microsoft can provide. He would also like more control over the data-center buildout. Altman's company also has increasingly go-it alone ambitions—it says subscriptions and licenses to ChatGPT are on track to bring in $10 billion a year. For its part, Microsoft now relies on OpenAI as both a major customer and supplier. That's the kind of concentration risk that should make Microsoft executives nervous. 'OpenAI has become a significant new competitor in the technology industry," Microsoft President Brad Smith said in a February 2024 blog post. This was the first public indication that the relationship may not have been as cozy as some supposed. Microsoft began working on its own AI models that year, and in October 2024, it declined to participate in a $6.6 billion OpenAI funding round. In January, Microsoft and OpenAI modified their agreement so that Microsoft would no longer be OpenAI's exclusive cloud provider, but would retain right-of-first-refusal for all new business. Microsoft hasn't been exercising that right to any large degree—OpenAI subsequently signed new cloud deals with CoreWeave and Alphabet's Google Cloud, two Microsoft competitors. The same January day as the deal modification, Altman stood in the Oval Office with President Donald Trump, Oracle Chairman Larry Ellison, and SoftBank Group CEO Masa Son to announce Project Stargate, an ambitious plan to raise $500 billion for a massive cluster of AI data centers controlled by Altman. The partnership and high-profile event made clear that OpenAI had new friends and had moved beyond its Microsoft reliance. The partnership on display in the Oval Office led to a $40 billion March funding round, led by SoftBank. But it came with a string attached: $20 billion of it is contingent on OpenAI doing another reorganization into a public-benefit corporation by the end of the year, which would give SoftBank and other new investors more conventional investor rights. But there are key hurdles in the way of that restructuring and the $20 billion, including a lawsuit from Elon Musk and regulatory approvals from California, Delaware, and the federal government. But the biggest obstruction is that Microsoft has a large stake in the current OpenAI. To convert corporate structures, OpenAI will have to negotiate new terms, and in a ticking-clock scenario like this, Microsoft has all the leverage, which grows each day. According to The Wall Street Journal, negotiations are getting testy. The main point of contention is how much of the new OpenAI Microsoft will own. But there is also the matter of OpenAI's acquisition of an advanced AI coding tool, Windsurf. Under their current arrangement, Microsoft has access to all of OpenAI's IP, and that would include Windsurf. But OpenAI doesn't want this, because Microsoft has its own coding assistant, GitHub Copilot, and this puts the companies on another axis of competition. In a joint statement, Microsoft and OpenAI told Barron's: 'We have a long-term, productive partnership that has delivered amazing AI tools for everyone. Talks are ongoing and we are optimistic we will continue to build together for years to come." According to the Journal, OpenAI thinks it could deter Microsoft from dragging out negotiations by keeping open the possibility of publicly accusing Microsoft of antitrust violations and lobbying the White House to open an investigation. Since the Stargate announcement, Altman has had a close relationship with Trump. In this regard, the Journal article is a message from OpenAI: We aren't powerless here. This is how the divorce could get ugly. Microsoft could slow-walk the talks, and as the end of the year approaches, the pressure would grow on OpenAI to settle, or lose $20 billion in funding. OpenAI, meanwhile, could start pushing on its White House levers to encourage some type of Microsoft investigation—what the WSJ called its 'nuclear option." But like any nuclear exchange, no one would emerge victorious. Microsoft would be tarred, and OpenAI would still miss its $20 billion deadline. Since the launch of ChatGPT, AI in the U.S. has been dominated by the Microsoft-OpenAI alliance. The now inevitable breakup has everyone scrambling to fill the void. Write to Adam Levine at
Business Wire
2 days ago
- Business
- Business Wire
Options Expands Microsoft Cloud Solution Provider (CSP) Direct Bill Capabilities in Dubai, Marking Fifth Global Region of Coverage
NEW YORK & LONDON & HONG KONG--(BUSINESS WIRE)--Options Technology (Options), a leading provider of cloud-enabled managed services for global capital markets, today announced the expansion of its Microsoft Cloud Solution Provider (CSP) direct bill capabilities to Dubai. This move comes as the city cements its status as a rising global hub for Hedge Funds, Private Equity firms, and Asset Managers, many of whom are actively expanding their footprint in the region. As a Tier 1 Microsoft Solutions Partner with CSP Direct Bill status across five global regions, we're ideally positioned to enable the next phase of capital markets expansion in Dubai. With this latest launch, Options enhances its ability to deliver seamless Microsoft 365 and Azure services to clients in Dubai, offering locally supported access through its Tier 1 CSP Direct Bill accreditation, now spanning five of Microsoft's designated global regions. The expansion also marks a strategic investment in Dubai's growing role as a magnet for leading financial institutions seeking innovation, regulatory clarity, and geographic diversification. Danny Moore, President and CEO of Options, commented: 'Delivering Microsoft cloud services directly in Dubai marks a significant milestone for Options. This expansion has been driven by increasing demand from our clients, particularly hedge funds, private equity firms, and asset managers headquartered in London and New York, who have recently established operations in Dubai. We're proud to support their growth with secure, enterprise-grade cloud infrastructure, localized support, and streamlined billing. As a Tier 1 Microsoft Solutions Partner with CSP Direct Bill status across five global regions, we're ideally positioned to enable the next phase of capital markets expansion in the region.' The new offering reinforces Options' flagship enterprise technology platform, AtlasWorkplace, which integrates Microsoft cloud services with secure connectivity, enterprise collaboration tools, and regulatory compliance solutions tailored for capital markets clients. This latest expansion of services will further strengthen Options' global operational delivery, complementing its 24/7 local support to better serve the specific needs of international clients and reinforcing its broader mission to support the capital markets through cutting-edge technology, enhanced security and expertise. Building on this momentum, the company's growth continues with new offices established in Dubai, Sydney, Paris, Toronto, and Chicago - expanding its global footprint alongside existing hubs in New York, London, Singapore, Tokyo, Hong Kong, Auckland, and Belfast. Today's news comes as the latest in a series of major milestones at Options, including its partnership with Couchdrop, enhanced security services with Netskope and receipt of the Emerging Partner award from Equinix. Options Technology: Options Technology (Options) is a financial technology company at the forefront of banking and trading infrastructure. We serve clients globally with offices in New York, London, Belfast, Cambridge, Chicago, Hong Kong, Tokyo, Singapore, Paris, and Auckland. At Options, our services are woven into the hottest trends in global technology, including high-performance Networking, Cloud, Security, and AI (Artificial Intelligence).
