Microsoft Q3 FY2026 Earnings, OpenAI Deal Update

Microsoft CEO Satya Nadella highlighted robust financial growth and strategic shifts during the company's fiscal year 2026 third-quarter earnings call, including details on a revised partnership with OpenAI and efforts to address consumer feedback on products like Windows and Xbox.

The call, covering the final full quarter under prior terms with OpenAI, revealed Microsoft's AI business reached an annual revenue run rate of $37 billion, a 123 percent increase year over year. Microsoft Cloud revenue exceeded $54 billion, up 29 percent from the previous year. Nadella emphasized the company's position as offering the broadest selection of AI models among hyperscalers, with over 10,000 enterprise customers using multiple options, including those from OpenAI, Anthropic, and open-source providers alongside Microsoft's own models.

A key focus was the partnership update announced on April 27, which ended Microsoft's exclusive rights to resell OpenAI's technology. OpenAI can now offer its models to competitors such as Amazon Web Services. In exchange, Microsoft gains royalty-free access to OpenAI's frontier models, agents, and advanced products through 2032, along with all associated...