Will OpenAI cling to NVIDIA and Oracle, leaving Microsoft marginalized?

As the battle for artificial intelligence infrastructure enters a new phase, OpenAI has reached unprecedented collaborations with several tech giants, including NVIDIA and Oracle. This has raised questions in the market about Microsoft's future dominance in the GenAI (generative artificial intelligence) field: Will Microsoft be "marginalized" by OpenAI?

According to news from the Chasing Wind Trading Desk, Morgan Stanley stated in a recent report that investors' concerns about Microsoft potentially being marginalized in the AI wave are unnecessary. Instead, the firm has upgraded Microsoft stock to "preferred" and raised the target price to $625, indicating a 23% upside from the current price.

Analysts believe that Microsoft's selective "letting go" is precisely a sign of its strategic maturity and confidence. In a resource-constrained environment such as GPUs and data centers, Microsoft is prioritizing service to enterprise customers with lower customer concentration, greater profit margins, and higher lifetime value.

At the same time, Microsoft has signed a new non-binding memorandum of understanding (MOU) with OpenAI, marking the next phase of their collaboration. Morgan Stanley emphasized that Microsoft's growth momentum extends far beyond OpenAI, with strong growth in its Azure cloud services, a solid moat in enterprise productivity applications, and an undervalued valuation level, all contributing to an attractive investment outlook.

How significant is the challenge to Microsoft's competitive position amid OpenAI's multiple collaborations?

Recently, OpenAI has signed a series of notable infrastructure agreements with several tech giants. Among the most noteworthy is OpenAI's five-year contract with Oracle, valued at up to $300 billion, and its collaboration with NVIDIA to deploy AI computing power worth up to $10 billion. Additionally, CoreWeave, Google Cloud, and SoftBank have also joined the ranks of OpenAI's infrastructure suppliers.

Concerns from the outside regarding OpenAI's collaboration with other cloud vendors center on why Microsoft would forgo some high-value contracts. According to Morgan Stanley's analysis, this should be viewed as Microsoft's strategic choice to maximize profits in a resource-constrained environment.

The report points out that Microsoft serves a diverse range of enterprise customers, which has multiple advantages compared to being deeply tied to a single large customer (like OpenAI):

• Lower customer concentration risk: Avoiding over-reliance on a single partner.
• Higher profit margins: The bargaining power of enterprise customers is relatively dispersed, resulting in fewer price discounts.
• Higher customer lifetime value (LTV): Enterprise customers tend to purchase additional software solutions, such as databases, to build lasting enterprise-level applications, leading to more stable and long-term revenue streams.

Therefore, Microsoft's choice to shift some of OpenAI's computing power needs to other suppliers may precisely reflect the strength of its own enterprise customer demand. Microsoft management has previously stated that the increase in capital expenditures is entirely to meet the needs of enterprise customers, and the company's commercial bookings achieved a 35% year-on-year growth in the most recent quarter, providing evidence for this In addition, although the details of Microsoft's new agreement with OpenAI (such as revenue sharing ratios) have not yet been disclosed, the non-binding memorandum of understanding signed by both parties indicates that the partnership continues to evolve. Morgan Stanley believes that Microsoft will prioritize ensuring long-term access to OpenAI's intellectual property in the new negotiations and maintain OpenAI's long-term viability, as a healthy partner is crucial to its own interests.

Azure Growth Driven by Multiple Factors, AI Ecosystem Expansion Far Exceeds "Binding" Logic

The sustained high growth of Azure's cloud and AI business is not solely driven by OpenAI; underlying investments, the trend of enterprises moving to the cloud, and innovations in GenAI applications collectively build Microsoft's fundamental resilience.

According to Morgan Stanley's estimates, Microsoft's AI-related capital expenditures have continued to increase over the past few years and are expected to reach $10.4 billion in revenue for Azure AI in fiscal year 2025, and exceed $20 billion in fiscal year 2029. Calculations show that even considering a 30% gross margin scenario, the corresponding revenue potential for Azure AI is far higher than current conservative estimates.

Morgan Stanley emphasizes that the growth of AI-related businesses is becoming increasingly diversified: on one hand, Microsoft is securing more AI cloud contracts outside of OpenAI, and the trend of revenue structure diversification is emerging; on the other hand, Azure is not only the main cloud provider for GenAI but also a comprehensive platform for "enterprise-level" applications, native PaaS, and IaaS innovations. CIO surveys show that Microsoft maintains a leading market share in multiple areas such as enterprise productivity, AI applications, and security, with strong long-term investment willingness from enterprise users in ecosystems like Azure and M365.

Enterprise Applications and Productivity Ecosystem Build Microsoft's Long-term Barriers

Analysis suggests that Microsoft is not merely a cloud computing service provider; its productivity applications (M365, Copilot, etc.) and the "digital office + knowledge worker" ecosystem are key to combating the challenges of Agentic AI and maintaining high customer stickiness .

New entrants in the intelligent agent AI space continue to emerge, but Morgan Stanley's research shows that CIOs and information workers' stickiness to Microsoft's M365, Teams, Copilot, and other office applications continues to rise. A survey in the second quarter of 2025 indicated that 33% of enterprise customers have upgraded their primary O365 subscriptions to the higher-tier E5 version, with over half of the customers planning further upgrades; the organizational penetration rate of AI products like M365 Copilot is expected to increase from the current 31% to 43% Historical experience also shows that Microsoft has always been able to maintain market dominance through mergers and acquisitions, integration (such as Teams against Slack, O365 against Google Workspace), and deepening its ecosystem, which will also apply to the potential impact of the "Agentic AI" ecosystem.