OpenAI, the creator of ChatGPT, has completed a sweeping corporate transformation that values the company at $500 billion, paving the way for it to become a fully profitable enterprise and one of the world's most valuable technology companies.
The Silicon Valley group, founded as a nonprofit research lab in 2015, has agreed to a new structure with its longtime partner and investor Microsoft that will allow it to raise new capital while maintaining its nonprofit parent body. Under the new arrangement, the OpenAI Foundation will hold equity in the profitable arm, while Microsoft will retain a 27 percent stake, now worth about $135 billion.
Announced Tuesday, the restructuring represents one of the most dramatic changes in the short history of artificial intelligence — a shift from idealistic research collective to commercial powerhouse. It also cements Microsoft's central role in the global AI race, extending its access to OpenAI's technology until 2032, even as OpenAI achieves artificial general intelligence (AGI) – the point at which a system can match the cognitive abilities of a highly educated human.
The deal connects OpenAI to Microsoft's massive Azure cloud computing network, with OpenAI agreeing to buy $250 billion worth of Azure services over the next several years. However, Microsoft will lose its previous right of first refusal on OpenAI's future cloud contracts — a sign that the AI company is looking for more flexibility as it expands.
Microsoft shares rose 2 percent to $542.07 after the announcement, giving the company a market value of $4.046 trillion and cementing its position alongside Nvidia in the exclusive $4 trillion club. Apple, valued at $3.997 trillion, is close behind.
“The scale of the Azure commitment underscores Microsoft's continued dominance in AI infrastructure,” said Barclays analyst Raimo Lenschow. “In our view, this deal also sets the stage for long-term collaboration between the two companies.”
Since launching ChatGPT in 2022, OpenAI has transformed from a niche research project to a global phenomenon, with over 800 million weekly active users and participation across finance, healthcare, education, and media.
Its chatbot – capable of generating human-like text and code – sparked the current AI boom, leading to massive investment in Silicon Valley and Wall Street. But while its influence has grown, OpenAI's financial model remains a challenge.
The company is loss-making as it prioritizes rapid model development and global deployment over near-term profitability. HSBC analysts forecast losses of $23.5 billion in 2025, rising to $60 billion by 2027, underscoring the cost of maintaining its cutting-edge research.
Under the new structure, OpenAI can more freely pursue large-scale funding and eventually prepare for a public listing – a step described by insiders as “inevitable” once its governance model has been stabilized.
In a statement, OpenAI president Brett Taylor said: “OpenAI has completed its recapitalization, simplifying its corporate structure. The nonprofit remains in control of profits, and now has a direct path to key resources ahead of the arrival of AGI.”
Gil Luria, head of technology research at DA Davidson, said the deal resolves a long-standing tension between OpenAI's research mission and commercial ambitions. “This restructuring settles the ownership rights of its technology versus Microsoft's,” he said. “This provides clarity on OpenAI’s investment path, thus facilitating future fund raising.”
The shift comes amid an AI investment frenzy that has redefined global market dynamics. Tech giants Microsoft, Nvidia and Apple have crossed the $4 trillion mark in recent months, fueled by optimism about the transformative potential of AI.
The momentum is spreading to other areas as well. PayPal announced on Tuesday that it has partnered with OpenAI, allowing ChatGPT users to purchase products directly through its payments platform. The news sent PayPal shares up nearly 4 percent to $73.02, and the company also declared its first dividend — a sign of investors' renewed confidence in the digital economy.
However, for OpenAI, the change marks a new era. The company that once promised to keep artificial intelligence “safe and accessible to everyone” is now one of the world's most valuable private enterprises – a status that brings both opportunity and scrutiny.
As AI becomes the defining industry of the 21st century, the new OpenAI-Microsoft arrangement solidifies its dominance at the center of it. What started as a research project in a San Francisco loft is now reshaping global markets, geopolitics, and the future of work.
Amy Ingham
Amy is a newly qualified journalist specializing in business journalism with responsibility for news content at Business Matters, the UK's largest print and online source of current business news.
