Microsoft's (MSFT) amended agreement with OpenAI is a "net positive" as the company locks in a six-year intellectual property control over OpenAI's technology and maintains a significant share of OpenAI, Wedbush Securities said in a note Monday.
The agreement represents an important moment for Microsoft as it looks to develop tech independence from OpenAI, while building its Copilot assistant and leveraging AI models from Anthropic in its 365 tools, the brokerage said.
Under the new deal, Microsoft will continue to hold a license to OpenAI technology through 2032, although the license is no longer exclusive, according to the note. Microsoft will no longer pay a revenue share to OpenAI while revenue share payments from OpenAI to Microsoft will continue through 2030 at the same percentage, subject to a total cap, Wedbush said.
The amended agreement also puts OpenAI on a "strong path forward" amid its upcoming initial public offering, giving it a clearer opportunity in the cloud environment while reducing barriers from its original partnership with Microsoft, the brokerage said.
Wedbush maintained its outperform rating on Microsoft with a $575 price target.
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