Microsoft CFO says OpenAI investment will cut into profit this quarter

Microsoft CEO Satya Nadella, right, speaks as OpenAI CEO Sam Altman looks on during the OpenAI DevDay event in San Francisco on Nov. 6, 2023.
Microsoft ‘s massive investment in OpenAI is weighing on earnings.
Following Microsoft’s quarterly earnings report on Wednesday, CFO Amy Hood said she expects the company to take a $1.5 billion hit to income in the current period, mainly because of an expected loss from OpenAI.
Microsoft has invested close to $14 billion in OpenAI, whose ChatGPT assistant has gone viral and inspired a whole new industry called generative artificial intelligence. The trend has generated billions of dollars in new revenue for Microsoft.
But OpenAI is losing bundles of cash. The company expects $5 billion in losses this year, before stock-based compensation, on $4 billion in revenue, The Information reported earlier this month, citing documents.
Hood said that for Microsoft, the loss is accounted for under the equity method. The accounting approach refers to a company’s share of the invested company’s profit or loss in a given period, a Microsoft spokesperson said.
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