Microsoft CEO Satya Nadella told Wall Street analysts Wednesday that the company plans to compete directly with OpenAI and Anthropic by selling enterprises its own AI models and infrastructure services.

The comments came as Microsoft reported $90 billion in quarterly revenue and $35.8 billion in net income. For the full fiscal year ending June 30, the company posted $331.8 billion in revenue with $133.7 billion in net income.

Nadella has been warning enterprises against relying solely on frontier AI labs for both models and application layers. He argues this approach forces companies to share internal secrets with model makers of questionable trustworthiness.

"Enterprise IT fears both data leaks and being locked into a vendor," Nadella said during the earnings call. He positioned Microsoft as offering lower costs while providing homegrown models alongside agents and AI security services.

Why Microsoft's pivot matters

The strategy represents a significant shift for Microsoft, which holds valuable stakes in both OpenAI and Anthropic. Those investments have generated substantial returns, but the company now sees those same partners as competitive threats.

Both OpenAI and Anthropic are expanding into applications and agentic infrastructure that could let them own customer relationships directly. This threatens Microsoft's position as the intermediary selling AI services to enterprises.

When UBS analyst Karl Keirstead asked Nadella about the open versus closed-source debate in AI, the CEO framed Microsoft's approach as giving customers more control and flexibility.

Nadella has been telling companies that trusting a single AI provider for everything could threaten their survival. His alternative: use Microsoft's platform to access multiple models while keeping sensitive data within Microsoft's enterprise-grade security framework.

The earnings call marked Microsoft's most explicit acknowledgment that it views its AI lab investments as both partners and competitors. The company is betting that enterprises will choose Microsoft's integrated approach over direct relationships with model makers.

Microsoft plans to expand its homegrown model offerings throughout 2026, targeting the same enterprise customers that OpenAI and Anthropic are courting with their own business-focused products.