Microsoft gained substantial profits through its OpenAI partnership because its financial reports showed a $7.6 billion income increase that resulted from the AI laboratory investment which the company made in their most recent quarter.

The software giant has invested over $13 billion in OpenAI, which reportedly shares 20% of its revenue with Microsoft. The two companies have not disclosed their revenue arrangement to the public yet this agreement serves as a primary factor that drives Microsoft’s financial performance in artificial intelligence. OpenAI, currently valued between $750 billion and $830 billion, recently restructured into a public benefit corporation, renegotiating part of its deal with Microsoft.

Under the new terms, OpenAI committed to purchasing an additional $250 billion in Azure services. These contracts are reflected on Microsoft’s books as “commercial remaining performance obligations,” which soared to $625 billion this quarter from $392 billion last quarter—45% of which is attributed to OpenAI.

Other AI partnerships also contributed to Microsoft’s commercial bookings. Anthropic, for instance, boosted anticipated future revenue by 230%, following Microsoft’s $5 billion investment and the AI lab’s $30 billion Azure compute purchase.

However, Microsoft is also investing heavily in AI infrastructure. This quarter capital expenditures reached $37.5 billion because the company spent two-thirds of that amount on short-lived assets which included GPUs and CPUs used in Azure cloud services.

Microsoft generated $81.3 billion in revenue which exceeded analyst predictions of $80.27 billion and showed a 17% growth compared to the previous year. Cloud revenue reached $50 billion for the first time while all business segments except one achieved double-digit growth. Exceptions include Windows devices, which grew 1%, and Xbox content and services, which fell 5%.

As AI continues to drive profits and investments, Microsoft’s strategic bet on OpenAI and cloud infrastructure positions the company at the forefront of the rapidly expanding artificial intelligence sector.