OpenAI generated $10 billion in revenue for Microsoft in the quarter ended Sept. 30, about 11% of the Redmond company’s total revenue, according to its quarterly filing Wednesday.

The amount is up sharply. In the fiscal year that ended in June, Microsoft recorded $24.1 billion in revenue from its business with OpenAI, or about $6 billion a quarter on average.

That $10 billion surpasses some of Microsoft’s longest-running businesses. Xbox brought in $5.4 billion in the quarter. Search and advertising, which includes its Bing search engine, generated $6.6 billion. Windows licenses sold through PC makers, along with Surface and other Microsoft devices, brought in $3.6 billion.

The total covers revenue-sharing payments from OpenAI, as well as other business between the companies, such as OpenAI’s use of Azure to train and run its AI models. Microsoft didn’t say how much came from each, or how much of Azure’s growth came from OpenAI.

Azure revenue rose 48% to $33.2 billion in the quarter, beating Wall Street’s expectations and the company’s own forecast of 44% to 45% growth.

Microsoft has begun disclosing its revenue from OpenAI because its stake of about 24% makes OpenAI a “related party” under accounting rules, requiring it to report the business they do with each other.

Microsoft first reported the number in its annual report in July, as a full-year total. This is the first time it has given a quarterly figure.

The original AI alliance: Microsoft first invested in OpenAI in 2019, eventually committing $13 billion, and became its exclusive cloud provider. ChatGPT ran on Azure when it launched in late 2022.

The companies have loosened their ties since then. OpenAI restructured as a public benefit corporation in October 2025, and Microsoft gave up its right of first refusal to supply OpenAI’s computing capacity. OpenAI committed to buy an additional $250 billion in Azure services. An April 2026 agreement gave OpenAI broader freedom to use other cloud providers.

OpenAI has also agreed to keep sharing revenue with Microsoft through 2030.

In addition, Microsoft sells access to OpenAI’s models to business customers through its Azure OpenAI Service, and the models became the foundation for its Copilot products, putting Microsoft at the front of the generative AI boom. That revenue comes from Microsoft’s own customers, so it isn’t part of the $10 billion.

Microsoft, for its part, now builds its own AI models and offers models from Anthropic and others.

Many customers, not a few: Asked by Bernstein Research analyst Mark Moerdler whether AI growth on Azure was coming from big businesses or AI-native companies, Microsoft CEO Satya Nadella didn’t mention OpenAI.

He said he doesn’t want Azure’s AI business to depend on a few big customers, and that broad adoption by businesses is just getting started.

Nadella described it as “a decade-long thing,” and contrasted it with relying on “four customers who buy a lot of capacity from you” to show a few quarters of growth. That, he said, is “not a business as far as I’m concerned.”

He added that Microsoft has large customers who want to buy capacity, “and as long as the pricing is right, we may sell them some. If not, we will be patient.”

Later in the call, Goldman Sachs analyst Gabriela Borges brought up the fact that OpenAI made up 11% of revenue. Nadella didn’t address the number but praised OpenAI’s latest models and said customers are increasingly mixing models from different companies, or training their own.

He cited Microsoft’s tools for routing each task to whichever AI model handles it best. If you use AI coding agents, Nadella said, you want Anthropic and OpenAI “to compete for your workload, not like once a quarter, but for every task.”

New risk language: Microsoft also expanded a warning in its quarterly filing about the risks of depending on outside AI providers. The company builds products such as Copilot on AI models from outside companies, including OpenAI and Anthropic. It now says it has “limited visibility into or control over” how those models are designed, trained, secured and tested.

Without naming OpenAI or Anthropic, the same section notes that some of these AI partners are also “significant customers of Azure,” and that the benefits Microsoft expects from those relationships “may not be realized or sustained.” It says those partners could change how much they buy, and that Microsoft itself may change how it allocates scarce data center capacity or prices it.

Microsoft is an investor in both companies. According to its latest filing, it owns about 24% of OpenAI, down from about 25% in June and about 27% after OpenAI’s restructuring a year ago, and has put $12.0 billion of a promised $13.0 billion into the company.

In addition, Microsoft agreed last year to invest up to $5 billion in Anthropic, and its results for the June quarter included a $3.2 billion gain on that investment. Microsoft hasn’t disclosed the size of its Anthropic stake, and Anthropic’s IPO filing earlier this week didn’t specify it either.

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Update, 10/28: Microsoft’s Azure cloud business brought in $33.2 billion in revenue in the September quarter, up 48% from a year earlier, blowing past the company’s own forecast and beating Wall Street’s expectations. Read the full story.

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Microsoft’s earnings report Wednesday will come two days after the company offered buyouts to about 60,000 people, roughly a quarter of its employees. The call gives executives their first chance to say what the offer will cost, and to explain how it fits with the company’s long-term view of its workforce.

Whether or not they go into those details, it’s one of several issues to watch in Wednesday’s report, the first under Microsoft’s new reporting structure. Anthropic’s IPO filing on Monday adds another storyline, showing how much the Claude maker has agreed to spend on Microsoft’s cloud.

Coming into the report, Microsoft’s stock is near its high. Microsoft closed Monday at $532.60, about 2% below its record close of $543.45 on Oct. 13, after gaining roughly $1.4 trillion in market value since late June.

Here are the key numbers and issues heading into Microsoft’s results for the first quarter of its 2027 fiscal year, ended Sept. 30.

Core numbers: Analysts expect revenue of $90.75 billion, up nearly 17% from a year ago, and earnings of $4.72 per share, up 14%, according to Yahoo Finance. Microsoft’s own forecast was $89.85 billion to $90.95 billion, so Wall Street is looking for a result near the top of that range.

In July, Microsoft reported $90 billion in revenue for the June quarter, well above the $87.7 billion analysts expected.

A new scorecard: Microsoft announced in September that it would sort its business into two groups instead of the three it had used since 2015. This is the first quarter under the new setup.

The first, dubbed Agents and Infra, includes Azure, Microsoft 365, Dynamics, LinkedIn’s recruiting and sales tools, and server and productivity licensing. It brought in 81% of Microsoft’s revenue and 88% of its operating income in fiscal 2026, based on figures Microsoft recast under the new structure.

Microsoft expects Agents and Infra revenue of $75.15 billion to $75.75 billion this quarter, which would be growth of about 22% to 23%, by GeekWire’s calculation.

The other group, Devices and Consumer, includes Windows, Xbox and search advertising. Microsoft expects it to bring in $14.7 billion to $15.2 billion, down 5% to 8% from a year earlier.

Azure, in dollars: Microsoft started disclosing Azure’s annual revenue last year, when it passed $75 billion, and topped $100 billion in fiscal 2026. Starting this quarter, it reports the figure every quarter. It also changed what counts as Azure: GitHub’s cloud business and Security Copilot now fall under Microsoft 365, and its healthcare cloud moved to a new industry unit.

Counted that way, Azure brought in $29.4 billion in the June quarter, up 42%. Microsoft expects growth of 44% to 45% this quarter, not counting currency fluctuations, which would put Azure at roughly $32 billion, by GeekWire’s calculation. That compares with the roughly 45% Microsoft projected in July, under the old definition.

Hitting that forecast may not be enough. Investors are looking for about 46%, BNP Paribas analyst Stefan Slowinski wrote in a note Monday. In January, Azure beat Microsoft’s own forecast and the stock still fell 10%, because investors had privately expected more.

“Azure moves the stock, but the read that matters is whether capacity is absorbed as fast as it lands,” wrote Dan Ives of Yorkville Ives in a note last week.

Capital spending: Microsoft expects capital expenditures of more than $50 billion for the quarter, which would be a record. That’s up from $41 billion in the June quarter and $34.9 billion a year earlier.

An accounting change reduces what Microsoft reports as capital spending, without reducing its planned investment. Microsoft now assumes its data center buildings will last 25 years instead of 15. As a result, more of its data center leases will be classified in a way that doesn’t count as capital spending, CFO Amy Hood said on the July earnings call.

That change alone lowered Microsoft’s capital spending estimate for calendar 2026 to about $175 billion, from the roughly $190 billion it projected in April. Hood said the company’s actual spending plans hadn’t changed.

Cloud margins: Microsoft Cloud gross margin came in at 65% last quarter, better than expected but down from a year earlier. Microsoft said it expects the figure to be relatively stable this quarter. It also expects operating margins to be roughly flat with a year ago.

Workforce: The new “voluntary exit” offer, announced Monday by Chief People Officer Amy Coleman, covers participating teams in the U.S., Canada, the U.K. and India. It has no age or tenure requirement and extends to some vice presidents. Employees have until the first week of December to decide, and Microsoft hasn’t said how much the offer will cost or when it will record the charge.

For the spring retirement program, Hood disclosed the cost on the April earnings call: about $900 million, with roughly $350 million in cost of revenue and $550 million in operating expenses. The charge showed up in the following quarter. About 30% of the 8,750 eligible employees accepted.

The new offer is less generous. It matches Microsoft’s standard severance, without the extended healthcare of the spring program, and the company expects a much smaller share of people to take it. But the pool of eligible employees is nearly seven times larger.

Microsoft says the offer doesn’t mean it needs fewer people. Coleman said in July that the company was studying whether to make voluntary exits a regular part of managing its workforce. It has told investors to expect operating margins roughly flat this quarter and down less than a point for the full fiscal year, even with record capital spending.

Nadella has addressed this before. In a July 2025 memo to employees, after Microsoft laid off about 15,000 people, he acknowledged the “uncertainty and seeming incongruence” of thriving financially while cutting jobs. “This is the enigma of success in an industry that has no franchise value,” he wrote.

In his annual shareholder letter last week, he focused on Microsoft’s spending on AI infrastructure. “Based on the demand we see and the efficiencies we are driving, I am confident in the long-term returns on our investments,” Nadella wrote. “We are building against a growing book of business tied to this secular shift.”

Microsoft had about 223,000 employees as of June 30, before it cut 4,800 jobs in July and more in September. The Information reported this month that Azure President Girish Bablani told leaders in his group to find ways to cut costs by at least 20%. Microsoft called the report inaccurate and said Azure leadership had not directed teams to develop cost-cutting plans.

Copilot: Microsoft said in July that businesses were paying for more than 30 million Microsoft 365 Copilot seats, up from 20 million in April. That’s still only about 7% of the more than 450 million commercial Microsoft 365 seats.

The bigger change is in how Microsoft charges for Copilot and its other AI tools. In July it added usage-based billing alongside per-seat pricing. It’s also pushing customers toward E7, a new premium bundle that includes Copilot. Microsoft expects Microsoft 365 commercial cloud revenue to grow about 17% this quarter, not counting currency swings, a number that now includes GitHub.

The BNP Paribas analyst Slowinski, who attended Microsoft’s Frontier Tour event in London last week, wrote that partners are seeing more customers roll out Copilot company-wide. Partners also told him that Microsoft now ties 35% of E7 sales incentives to how much customers use features like Cowork.

Anthropic and OpenAI: Anthropic’s S-1 filing shows the company has committed to spend at least $44.9 billion with Microsoft from November 2026 to May 2033, up from the $30 billion Azure commitment announced last November. That’s well below its minimum commitments to Amazon ($110 billion) and Google ($114.5 billion).

Microsoft agreed last year to invest up to $5 billion in Anthropic. Its results for the June quarter included a $3.2 billion gain on that investment.

OpenAI remains the bigger factor. Microsoft’s commercial remaining performance obligation (RPO), the measure of signed contracts it hasn’t yet delivered on, reached $678 billion last quarter, up 84% from a year earlier. Without OpenAI, the backlog grew 25%. OpenAI told investors its annualized revenue approached $50 billion at the end of September, The Information reported, lower than earlier reports of about $70 billion.

Windows: Microsoft expects revenue from Windows licenses sold to PC makers, along with its own devices, to fall a little more than 20%. Higher memory prices are making PCs more expensive, and PC makers are still working through extra inventory.

What’s next: Alphabet also reports Wednesday afternoon, and Amazon reports Thursday, setting up a side-by-side look at Azure, Google Cloud and AWS.

Anthropic is aiming to go public the week of Nov. 16, according to the Wall Street Journal.

Check back Wednesday afternoon for coverage.

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The Washington Technology Industry Association kicked off the third annual Seattle AI Week on Monday with a reminder that AI affects everyone, from engineers and artists to “someone who learned about ChatGPT today,” as WTIA’s Nick Ellingson put it.

“All of us should be a part of that conversation,” he added.

A few people in the audience took that statement literally.

Members of Troublemakers, a Seattle climate activism group, interrupted the week’s opening panel on AI and economic growth several times before they were led out by security. Outside on Elliott Bay, others floated in kayaks with a banner: “Power for People, Not for Tech.”

“These are not your constituents — we are,” one protester told Beau Perschbacher, Gov. Bob Ferguson’s senior policy advisor, as he addressed the large crowd of tech and startup leaders at Seattle’s AI House. Perschbacher was on a panel with Joe Nguyen of the Seattle Metropolitan Chamber of Commerce and Mattie Zazueta of OpenAI, the event’s presenting sponsor.

The group’s main message, according to members who spoke with GeekWire: the rush to build data centers and roll out AI is putting the state’s communities, jobs and environment at risk, and Washington should be investing in green jobs and clean energy instead.

The protest comes amid a broader backlash against data centers in Washington state and across the country. The Seattle City Council voted unanimously in June to pause new large data centers in the city for a year, and Washington AI Resistance organized at least 19 protests around the state this month calling for a statewide moratorium.

The event also came the same day Microsoft offered voluntary buyouts to about 60,000 employees, roughly a quarter of its workforce, as it spends tens of billions of dollars on data centers and AI infrastructure.

The backlash contrasts with a push from the business and tech community for Washington state and the Seattle region to do more to stay competitive in the AI era.

“Washington helped build the technology economy of the last generation. We have an extraordinary opportunity to lead the AI economy of the next,” said former Gov. Chris Gregoire, now CEO of the business group Challenge Seattle, in her opening remarks at the AI Week event.

Gregoire cited efforts to put AI to work on the region’s own problems, including an AI permitting pilot in Everett that she said could cut the median wait for an accessory dwelling unit permit from 252 days to 90. She highlighted the AI-driven protein design work of Nobel laureate David Baker of the University of Washington, with applications in areas including the environment, agriculture and health care.

She also warned that Washington is close to the bottom for its business climate, even though it ranks second in North America for tech talent, as other states court its companies and jobs.

On the panel, Perschbacher said Ferguson’s administration has been focused on data centers since taking office, setting up a work group early last year to study their impact. The group looked for a Washington community that had been harmed by a data center and couldn’t find one, he said.

He added that the state won’t permit data centers to run diesel generators around the clock, and that their water use turned out to be “not out of line with a typical industrial user.”

Electricity is a different story. Data centers “use a really significant amount of electricity,” he said, and with demand also rising from EVs and heat pumps, getting enough power “is a major challenge.”

Perschbacher addressed the protesters directly, saying Washington has some of the strictest environmental laws in the country and that the state’s data center work group reinforced those rules rather than weakening them. Bills on ratepayer protections and transparency for data centers are likely to come back in the next legislative session, he said.

The issue also came up in the event’s second panel, on AI policy. State Sen. Marko Liias, who sponsored a bill this year on high-risk uses of AI, said data centers that want to locate in Washington need to meet “stringent expectations,” including adding clean energy to the grid, recycling water and dropping nondisclosure agreements that keep communities in the dark. Washington’s goal “has never been to be the cheapest or easiest place,” he said.

“When energy becomes scarce, I do think we need to be clear that our communities deserve access to that energy before the data centers do,” Liias said.

Joe Braidwood, founder of AI governance startup Glacis, which works out of AI House, said on the same panel that it was the first event he’d attended there with a public protest. “I think that’s actually kind of promising that people care enough to want to come together and talk and disagree and figure this out,” he said.

Zazueta, OpenAI’s global head of community programs, said in the opening panel that the industry needs to do a better job showing people the benefits of AI. Many people “read about these scary headlines,” she said, but don’t see how the technology applies to their daily lives.

OpenAI runs AI literacy workshops and trains libraries and community groups to lead their own, she said. The company opened an expanded office in Bellevue in March, its largest engineering center outside San Francisco.

Speaking with GeekWire outside the event on Monday afternoon, one of the protesters who had interrupted the panel singled out that remark. She said it dismissed public concerns about AI as the product of bad headlines, and she objected to the idea of using community groups to win people over to the benefits of artificial intelligence.

“They want to infiltrate our communities,” she said.

The opening panel with Zazueta, Perschbacher and Nguyen was titled “The Abundance State: Washington’s Chance to Lead the AI Future.” The protester objected to that framing, saying the panelists’ idea of abundance came down to easing permits for data centers.

It wasn’t the first time the group has protested the tech industry’s energy use. In 2024, it blocked entrances at Amazon’s Seattle headquarters to protest the company’s plans to power data centers in Oregon with natural gas.

Inside the event on Monday, as the interruptions continued, Nguyen, a former state senator who now leads the Seattle chamber, had responded to the protesters directly. “If you want to have your own event, have your own event,” he told them.

After they were led out, Nguyen said he agreed with the protesters, calling their passion “very warranted.” Those concerns are one reason Washington created some of the most stringent energy policies in the country, he said, adding that everyone would be better off if data centers elsewhere were held to the same standards.

“I think we’re very unique in Washington state to be able to actually do this in a way that really is mindful of our values, of the environment, and also pushing for innovation as well,” he said.

At the same time, Nguyen said demand for AI and data centers is market-driven, and it isn’t fair to criticize data centers while using them every day.

“For anybody who’s upset with data centers, I hope that when you email me, don’t email me,” he said. “Print it off and walk it to my office.”

Update, Oct. 27: Protesters interrupted the opening session of WTIA’s Seattle AI Summit six times Tuesday morning, during an on-stage interview of OpenAI’s Vijaye Raji by GeekWire’s Todd Bishop. They objected to AI-related job losses, the climate impact of data centers, OpenAI’s ties to the Trump administration and the leadership of OpenAI CEO Sam Altman.

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