Microsoft’s $440 billion wipeout, and investors angry about OpenAI’s debt, explained | Fortune
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Microsoft’s stock has plummeted 12% owing to a slight miss on revenue, showing how spooked investors are by the “spend now, profit later” AI market.

The immediate catalyst, it seems, is an intensifying focus on capex, or capital expenditures. Microsoft revealed that its spending surged 66% to $37.5 billion in the latest quarter, even as growth in its Azure cloud business cooled slightly. Even more concerning to analysts, however, was a new disclosure that approximately 45% of the company’s $625 billion in remaining performance obligations (RPO)—a key measure of future cloud contracts—is tied directly to OpenAI, the company revealed after reporting earnings Wednesday afternoon. (Microsoft is both a major investor in and a provider of cloud-computing services to OpenAI.)

    • chiliedogg@lemmy.worldEnglish
      10·
      11 hours ago

      3.2 trillion is a stupid amount of money, but it isn’t all liquid. A 440 billion dollar hit (nearly 14%) would be very, very bad for them.

      With the memory and SSD fiasco going on right now, fewer people are buying new PCs, which impacts their sales. Combined with the Windows 11 fiasco, the massive gaming division investments going nowhere, and the AI bubble, they’re probably the most vulnerable they’ve been in decades.

      • jj4211@lemmy.worldEnglish
        4·
        9 hours ago

        OEM license revenue represents a tiny tiny bit of their financials these days. They could just charge nothing for it and business wise no one probably notice much of a difference.

        It is foundational to a lot of what they do, but older devices are just as good for their subscription and tie in revenue. Hell I use my work subscription for office from Linux, complete with OneDrive filesystem synchronization. Microsoft gets all their money from my headcount even as I don’t even use Windows.

        But that capex could bite them hard if revenue falls to follow from it. That’s pretty much the only exposure investors care about.

        • chiliedogg@lemmy.worldEnglish
          4·
          8 hours ago

          OEM licensing isn’t the important part. It’s everything that comes with it. Subscriptions, cloud storage, etc. In my city, a bunch of field workers are being moved from laptops to iPads and phones with the next hardware refresh due to the price jump in laptops. Microsoft won’t have integrated Onedrive and SharePoint and full Office Subscriptions for them.

          We already use third-party web apps that aren’t Microsoft (and are mostly hosted by AWS) for a lot of their work, so the only Microsoft product they’ll have is an email address.