Michael Burry Says OpenAI Exclusivity Breakup Is 'Good For MSFT' Amid Buzz Of Bigger Problems At Sam Altman's Firm

• Burry said the move would be beneficial for Microsoft.
• “The Big Short” investor started a long position in MSFT last week and backed a few other software names he believes to be oversold.
• Separately, OpenAI has missed internal revenue and user targets, according to a new report in the Wall Street Journal.

Ace investor Michael Burry, who last week took a long position in Microsoft, said Monday that its revised partnership with OpenAI is a step in the right direction and would benefit the tech giant.

OpenAI and Microsoft announced an amended agreement on Monday, under which Microsoft would no longer have an exclusive right to sell OpenAI’s models, allowing the AI firm pursue deals with cloud-computing rivals like Amazon.com. 

In return for dropping that exclusivity – which had supported Microsoft’s cloud growth in the early phase of the AI boom – the software giant will stop paying a revenue share on OpenAI offerings sold through its Azure cloud platform.

Burry, writing in his Substack messaging channel, said: “Good for MSFT.” He did not elaborate. Microsoft shares ended marginally higher on Monday, but declined 0.3% in the overnight session.

Burry also recently purchased additional stakes in GameStop, Adobe, PayPal, and the stock market index operator MSCI.

MSFT Stock Under Pressure

Once the first-mover in AI, Microsoft has been a laggard of late. A broad-based selloff in software stocks and reports of simmering tensions with OpenAI have pressured shares in recent months. MSFT stock is down 12% year to date versus the 5% gains in the benchmark S&P 500 Index; it’s the second-worst-performing stock in the Magnificent Seven group behind Tesla.

The revised agreement helps quell speculation about a potential rift between Microsoft and OpenAI, which last year transitioned to a for-profit structure as it gears up for an initial public offering (IPO). Last month, the Financial Times reported that Microsoft had considered suing OpenAI over its deal with Amazon Web Services, alleging the arrangement used contractual structuring to sidestep the terms of its pact with Microsoft.

Investors are now turning to Microsoft’s fiscal third-quarter earnings report, which is scheduled to be released in post-market hours on Wednesday. Analysts expect revenue to rise 16% to $81.4 billion and adjusted earnings to rise 18% to $4.07 per share.

More Troubles For OpenAI?

Meanwhile, OpenAI recently missed its own targets for new users and revenue, stumbles that have raised concerns among some company leaders, according to a Wall Street Journal report on Monday, citing people familiar with the matter. CFO Sarah Friar reportedly told company leaders that she is worried OpenAI might be unable to pay for future computing contracts if revenue doesn’t grow fast enough. 

CEO Sam Altman has yet to comment on the report. On Monday, however, he posted on X about the revised Microsoft agreement and, in separate posts, described a $20 subscription for the Codex tool as "a really good deal" and added that "we love our users."

On Tuesday, arguments will begin in Elon Musk’s high-profile lawsuit against Altman and OpenAI, in which the Tesla CEO and early investor alleges the company strayed from its original mission and defrauded him by converting to a for-profit structure. The jury trial is being held in federal court in Oakland, California.

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