OpenAI calls out Microsoft reliance as risk in investor document ahead of expected IPO

In a recent financial document resembling an IPO prospectus, OpenAI has alerted investors to the risks associated with its close partnership with Microsoft. The document, viewed by CNBC, indicates that Microsoft's financial support constitutes a significant portion of OpenAI's funding and computational resources. OpenAI's report includes sections detailing 'Risks Related to the Transaction' and 'Risks Related to our Business'. This comes on the heels of the company's announcement last month of securing $110 billion in funding from notable partners like Amazon, Nvidia, and SoftBank. Additionally, OpenAI is reportedly negotiating to secure an extra $10 billion from a wider range of investors, with expectations for closure by the end of March. The concerns raised in the document provide a glimpse into what may be elaborated upon in OpenAI's forthcoming IPO filing, as the company prepares for a potential public offering this year. Besides the risks tied to Microsoft, OpenAI also highlighted challenges such as its heavy capital expenditures, reliance on computational resources, ongoing legal disputes with Elon Musk's xAI, and its unique status as a public benefit corporation controlled by the OpenAI Foundation. Since its establishment as a nonprofit research facility in 2015, OpenAI has experienced rapid commercial growth, especially after launching ChatGPT to the public in late 2022. The platform has since attracted 900 million weekly active users, generating a revenue of $13.1 billion in 2025 and achieving a valuation of $730 billion last month. Microsoft has been a key investor since 2019, prior to the launch of ChatGPT, and has committed to moving certain OpenAI services exclusively to its Azure cloud. With investments totaling $13 billion, Microsoft disclosed that its 27% stake in OpenAI was worth $135 billion at the time of the AI company's restructuring last October. OpenAI emphasized to investors that its future performance hinges on forming successful partnerships beyond Microsoft. They warned, "If Microsoft alters or ends its commercial partnership with us, or if we fail to diversify our business relationships, our financial health could be jeopardized." As both companies strengthen their foothold in the rapidly evolving generative AI market, they find themselves competing for users. In 2024, Microsoft officially categorized OpenAI among its competitors, which also includes industry giants like Amazon, Apple, Google, and Meta. Furthermore, OpenAI has sought alternative cloud providers like CoreWeave, Google, and Oracle to accommodate high demand. The document also outlines potential supply chain vulnerabilities, notably concerning the global chip shortage. OpenAI expressed concern that any disruption at Taiwan Semiconductor Manufacturing Company, potentially due to geopolitical tensions, could significantly impact its supply chain. Looking ahead, OpenAI anticipates ongoing substantial investments in computational resources and infrastructure, with estimates of approximately $665 billion in commitments through 2030. The company noted that its computational needs are dynamic and likely to expand considerably. Legal troubles also loom large; OpenAI warned investors of ongoing litigation related to copyright, patent issues, and employment disputes. The company faces lawsuits filed by Musk and his company, xAI, as well as numerous claims from ChatGPT users who allege that the product contributed to serious mental health crises. Notably absent from the risk factors is the mention of CEO Sam Altman, who has faced his share of controversies. Following a brief ousting by the board in late 2023, which cited a loss of confidence, Altman was reinstated after pushback from employees and investors. OpenAI acknowledged that the 'success of our company and the operation of our business rely on Key Personnel', but did not specify any names. For those experiencing distress, support is available through the Suicide & Crisis Lifeline at 988.