OpenAI's Biggest Risk? It Might Be Microsoft

For a company valued at $730 billion, OpenAI's most candid admission to investors wasn't about competition or regulation. It was about its closest ally.

In a financial document circulated to prospective investors — structured much like an IPO prospectus — OpenAI identified Microsoft as a potential threat to its own business. The company wrote that Microsoft supplies "a substantial portion of our financing and compute," and warned that if the partnership were modified or terminated, its "business, prospects, operating results and financial condition could be adversely affected."

For a company in the middle of the largest private funding round in history, that's a striking thing to put in writing.

The $120 Billion Round With an Asterisk

Last month, OpenAI announced $110 billion in fresh investment from strategic partners including Amazon, Nvidia, and SoftBank. The company is now working to close an additional $10 billion from a broader pool of investors by the end of March, according to sources familiar with the deal. At the center of this fundraising is a document that reads less like a pitch deck and more like a regulatory filing — complete with a "Risks Related to our Business" section that prospective investors rarely see this early.

The timing matters. OpenAI has signaled it could make its public market debut as soon as this year. This document, in effect, offers a preview of what the eventual IPO filing will look like — and the risks it will be forced to disclose to the world.

Microsoft has been OpenAI's anchor investor since 2019, well before ChatGPT launched. Total investment: $13 billion. Estimated value of its 27% diluted stake: $135 billion. In exchange, OpenAI committed to running key services on Microsoft's Azure cloud platform. That deal built OpenAI into what it is today. It also created a dependency that the company now has to explain to investors.

OpenAI called the disclosure "a standard legal risk factor... similar language has been in place for years," adding that "Microsoft is and will remain a critical long-term partner." That may be true. But the fact that Microsoft added OpenAI to its list of competitors in its 2024 annual report — alongside Google, Apple, and Meta — suggests the relationship is more complicated than a simple partnership.

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A Longer List of Risks

The Microsoft dependency is the headline, but it's far from the only concern flagged in the document.

OpenAI called out geopolitical risk directly: if TSMC, the Taiwanese chipmaker that manufactures the semiconductors powering AI models, is disrupted by regional conflict — a clear reference to China-Taiwan tensions — OpenAI could face "severe disruptions" to its supply chain. The company has already locked in roughly $665 billion in estimated compute spend commitments through 2030. That number is not a typo.

On the legal front, OpenAI is contending with three separate lawsuits from Elon Musk or his company xAI, now part of SpaceX after a merger last month. The first case goes to trial next month. More sobering are the 14 lawsuits filed in California courts by ChatGPT users or their families, who allege the company's products contributed to mental illness, suicide, or death. The first wrongful death case was brought by the parents of 16-year-old Adam Raine, who died by suicide after reportedly being encouraged to do so by ChatGPT. OpenAI said it is "reviewing these cases in light of our existing industry-leading safeguards."

One name is conspicuously absent from the risk factors: Sam Altman. The CEO who was fired by the board in late 2023 and reinstated days later under pressure from employees and investors is not mentioned by name anywhere in the document. The company acknowledges it depends on "Key Personnel" but leaves it at that.

What This Means for Investors

For anyone considering OpenAI as an investment — either in this round or at IPO — the document raises questions that the $730 billion valuation doesn't fully answer.

OpenAI generated $13.1 billion in revenue in 2025 and now has 900 million weekly active ChatGPT users. Those are real numbers. But the company is also burning through capital at a rate that makes even seasoned tech investors pause. Capital expenditure commitments stretch into the hundreds of billions. The company's unusual structure — a public benefit corporation whose parent is a nonprofit foundation — adds governance complexity that traditional investors aren't accustomed to pricing.

Meanwhile, the competitive landscape is accelerating. Google, Anthropic, Meta, and xAI are all pushing hard. OpenAI has already begun diversifying its cloud infrastructure beyond Azure, turning to CoreWeave, Google Cloud, and Oracle to meet demand. That's the right strategic move — but it also signals that the Microsoft relationship, however critical, has limits.