Microsoft's financial report revealed an unexpected expense that surprised analysts: a $4.1 billion charge related to its investment in OpenAI. This figure represents a 490% increase compared to the same period last year. According to Bernstein analyst Firoz Valliji, based on Microsoft's disclosure of a 32.5% stake in OpenAI in its last quarterly report, this implies OpenAI's quarterly losses exceeded $12 billion.

The calculation stems from Microsoft's use of the equity method of accounting for its OpenAI holdings, under which it only reports its proportional share of the AI company's losses or profits. OpenAI recently restructured as a for-profit entity, with Microsoft set to hold a 27.5% stake moving forward.

A $12 billion quarterly loss would rank among the largest single-quarter losses in tech company history. This figure is not far from the $13 billion in annual revenue OpenAI previously told investors it aimed to achieve.

The specifics behind the losses remain unclear, as OpenAI does not publicly disclose financial performance. The company faces substantial computing costs due to heavy investments in training new AI models, alongside an expensive talent war in the industry.

CEO Sam Altman has informed investors to expect years of significant losses as OpenAI spends aggressively to establish leadership in what it views as an economy-transforming technology.

During a Stanford University talk last year, Altman stated: "I don’t care if we burn $500 million, $5 billion, or $50 billion a year. I genuinely don’t. It’s going to be expensive. But it’ll be worth it."