"Let's look first at page 9 of the official earnings filing with the US Securities and Exchange Commission, which includes the following passage: We have an investment in OpenAI Global, LLC ("OpenAI") and have made total funding commitments of $13 billion, of which $11.6 billion has been funded as of September 30, 2025. The investment is accounted for under the equity method of accounting, with our share of OpenAI's income or loss recognized in other income (expense), net."
"That second sentence is important. This isn't mark-to-market accounting, where it takes the presumed value of the investment based on what the market currently says it's worth (that value is a staggering $135 billion) and marks it up or down from its initial investment. This is equity accounting, where OpenAI's gains or losses directly affect Microsoft's net income on its income statement. This is how finance types account for a large but non-controlling stake in another company."
"Current year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $3.1 billion and $0.41, respectively. Prior year net income and diluted EPS were negatively impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted EPS of $523 million and $0.07, respectively."
Microsoft reported earnings for the quarter ended Sept. 30 and filed SEC documents showing funding commitments to OpenAI totaling $13 billion, with $11.6 billion funded as of September 30, 2025. The investment is accounted for under the equity method, with Microsoft's share of OpenAI's income or loss recognized in other income (expense), net. Microsoft reported that net losses from investments in OpenAI reduced current-year net income and diluted EPS by $3.1 billion and $0.41, respectively, and reduced prior-year figures by $523 million and $0.07. OpenAI finalized a transition to a for-profit structure, and Microsoft now owns a 27 percent stake. The filings imply OpenAI suffered a net loss of about $11.5 billion or more during the quarter.
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