Microsoft announced that it generated $10 billion in revenue from its commercial dealings with OpenAI in the third quarter of 2026, which concluded on September 30. This figure accounts for roughly 11% of Microsoft's total revenue for the period, which reached $92.3 billion. The financial disclosure underscores the significant economic ties between the technology giant and the artificial intelligence research firm.
The revenue reported includes payments from revenue-sharing agreements and OpenAI's utilization of Microsoft's Azure cloud computing services. While Microsoft did not break down the exact contribution from each component, the substantial figure indicates a deep reliance on Azure for OpenAI's computational needs. This dependency is further illustrated by Azure's strong performance, with its revenue surging 48% year-over-year to $33.2 billion, exceeding analyst expectations.
This $10 billion quarterly figure represents a sharp increase from previous periods. In the fiscal year ending June 2026, Microsoft reported $24.1 billion in revenue from OpenAI, averaging approximately $6 billion per quarter. The latest quarterly results surpass revenue generated by other major Microsoft businesses, including Xbox, which brought in $5.4 billion, and its search and advertising division, which generated $6.6 billion in the same quarter.
Microsoft's decision to disclose this revenue stream is attributed to its equity stake in OpenAI, which makes the AI firm a "related party" under accounting regulations. This ownership structure, estimated at approximately 24%, means Microsoft is partly invested in one of its largest clients. The company's overall financial performance in the quarter was strong, with total revenue increasing 19% year-over-year and beating Wall Street's estimates. Microsoft's AI business specifically reported over $37 billion in annual recurring revenue (ARR), showing a 123% increase.
Microsoft CEO Satya Nadella noted during the earnings call that the company is experiencing one of the most significant platform shifts in technology history, driven by the proliferation of AI agents. He highlighted that automated tasks completed by Copilot have doubled since July, with daily active users increasing by nearly 50% quarter-over-quarter. The company also announced the addition of 24 new data centers across five continents during the quarter, supporting its expanding AI infrastructure.
Despite the strong revenue from OpenAI, Microsoft's capital expenditures for the quarter totaled $39.4 billion, lower than some analyst expectations, partly due to delays in third-party capacity deliveries. However, CFO Amy Hood anticipates capital spending to exceed $50 billion in the next quarter.