A $37 billion annual AI revenue run rate and royalty-free access to frontier models through 2032 — that is how Microsoft CEO Satya Nadella framed the revised OpenAI partnership during the company's fiscal Q3 earnings call on Wednesday.

The remarks came after days of speculation that Microsoft had lost its AI edge. OpenAI ended Microsoft's exclusive cloud access to its technology last week and promptly struck a deal with Anthropic, with Sam Altman and Anthropic CEO Matt Garman giving joint interviews about the collaboration.

Nadella was unmoved. "We have a frontier model, with all the IP rights that we will have access to all the way to '32 and we fully plan to exploit it," he told analysts.

What Microsoft kept — and what it gave up

Under the restructured agreement, Microsoft loses exclusivity over OpenAI's models for cloud distribution. Other hyperscalers, starting with Anthropic, can now offer OpenAI products directly.

What Microsoft retained: royalty-free access to OpenAI's models and agent products, a 27% equity stake in the company, and a commitment from OpenAI to purchase more than $250 billion in Microsoft cloud services over time.

Nadella stressed that the economics still favour Redmond:

The Q3 results — the last full quarter under the old deal — showed AI revenue growing 123% year over year. Microsoft did not break out how much of that figure came from OpenAI-powered products versus its own Copilot offerings and third-party model hosting.

The multi-model argument

Nadella also sought to reframe the competitive picture. Enterprise customers increasingly want access to several model providers, he argued, and Azure already hosts models from Anthropic, open-source projects, and others alongside OpenAI.

"Over 10,000 customers have used more than one model," he said, positioning Azure as a neutral platform rather than an OpenAI-dependent one.

That argument carries weight only if Azure's non-OpenAI model business scales fast enough to offset any revenue OpenAI's new cloud partnerships redirect to Anthropic or Google Cloud.

Microsoft shares were roughly flat in after-hours trading following the earnings report. The company posted strong results across its cloud division, with CNBC reporting continued profit growth.

The real test arrives in the coming quarters, when OpenAI's products begin shipping on rival clouds and enterprise buyers start splitting workloads across providers.