As the artificial intelligence infrastructure battle enters a new phase, OpenAI has forged unprecedented partnerships with multiple tech giants including NVIDIA and Oracle. This development has raised market concerns about Microsoft's future dominance in the GenAI (Generative Artificial Intelligence) sector: Will OpenAI "marginalize" Microsoft?

According to market sources, Morgan Stanley stated in a recent report that investor concerns about Microsoft potentially being sidelined in the AI wave are unfounded. The firm has actually upgraded Microsoft stock to "overweight" and raised its target price to $625, representing a 23% upside potential from current levels.

Analysts believe that Microsoft's selective "hands-off" approach actually demonstrates strategic maturity and confidence. In an environment with limited GPU and data center resources, Microsoft is prioritizing customers with lower concentration, higher profit margins, and greater lifetime value in the enterprise segment.

Meanwhile, Microsoft and OpenAI have signed a new non-binding memorandum of understanding (MOU), marking the next phase of their collaboration. Morgan Stanley emphasizes that Microsoft's growth drivers extend far beyond OpenAI, with Azure cloud services showing robust growth, solid moats in enterprise productivity applications, and undervalued valuation levels collectively creating an attractive investment proposition.

**OpenAI's Multi-Party Partnerships Accelerate: What Challenges Does This Pose to Microsoft's Competitive Position?**

Recently, OpenAI has signed a series of notable infrastructure agreements with multiple tech giants. Most prominently, OpenAI reached a five-year contract worth up to $300 billion with Oracle and will collaborate with NVIDIA to deploy up to $10 billion in AI computing power. Additionally, CoreWeave, Google Cloud, and SoftBank have all joined OpenAI's infrastructure supplier lineup.

Market concerns about OpenAI's partnerships with other cloud providers center on why Microsoft would relinquish some high-value contracts. According to Morgan Stanley's analysis, this should be viewed as Microsoft's strategic choice to maximize profits in a resource-constrained environment.

The report indicates that Microsoft serves diversified enterprise clients, which offers multiple advantages compared to deep binding with a single large customer like OpenAI:

- Lower customer concentration risk: Avoiding over-dependence on a single partner - Higher profit margins: Enterprise customers have relatively dispersed bargaining power with fewer price discounts - Higher customer lifetime value (LTV): Enterprise customers tend to purchase additional software solutions such as databases to build lasting enterprise applications, generating more stable and long-term revenue streams

Therefore, Microsoft's decision to transfer some of OpenAI's computing requirements to other suppliers may actually reflect the strong demand from its own enterprise customers. Microsoft management previously stated that increased capital expenditure is entirely to meet enterprise customer demand, supported by the company's 35% year-over-year growth in commercial bookings in the most recent quarter.

Furthermore, while details of Microsoft and OpenAI's new agreement (such as revenue sharing ratios) have not been disclosed, the non-binding memorandum of understanding signed by both parties indicates that their partnership continues to evolve. Morgan Stanley believes Microsoft will prioritize securing long-term access rights to OpenAI's intellectual property in new negotiations and maintain OpenAI's long-term viability, as a healthy partner is crucial to its own interests.

**Azure Growth Driven by Multiple Factors: AI Ecosystem Expansion Beyond "Binding" Logic**

The continued high growth rate of Azure cloud and AI business is not solely driven by OpenAI. Underlying investments, enterprise cloud migration trends, and GenAI application innovation collectively build Microsoft's fundamental resilience.

According to Morgan Stanley's calculations, Microsoft's AI-related capital expenditure has continued to increase over the past few years and into the future. Azure AI business is expected to reach $10.4 billion in revenue in fiscal 2025 and exceed $20 billion by fiscal 2029. Calculations show that even considering only a 30% gross margin scenario, the corresponding Azure AI revenue potential far exceeds current conservative estimates.

Morgan Stanley emphasizes that AI-related business growth has become increasingly diversified: On one hand, Microsoft's AI cloud contracts outside of OpenAI are growing, with revenue structure diversification becoming a trend. On the other hand, Azure is not only a primary cloud supplier for GenAI but also a comprehensive platform for enterprise-grade applications and native PaaS and IaaS innovation. CIO surveys show that Microsoft maintains leading market share positions across multiple areas including enterprise productivity, AI applications, and security, with enterprise users showing strong willingness to make long-term investments in Azure and M365 ecosystems.

**Enterprise Applications and Productivity Ecosystem Build Microsoft's Long-term Barriers**

Analysis suggests that Microsoft is not merely a cloud computing service provider. Its productivity applications (M365, Copilot, etc.) and "digital office + knowledge worker" ecosystem are key to resisting Agentic AI challenges and maintaining high customer stickiness.

While intelligent Agent-type AI newcomers continue to emerge, Morgan Stanley research shows that CIOs and information workers' stickiness to Microsoft's M365, Teams, Copilot, and other office applications continues to increase. Second quarter 2025 surveys indicate that 33% of enterprise customers have upgraded their primary O365 subscriptions to the higher-tier E5 version, with over half planning further upgrades. The organizational penetration rate of M365 Copilot and other AI products is expected to rise from the current 31% to 43%.

Historical experience also shows that Microsoft has consistently defended its market dominance through acquisitions, integration (such as Teams' response to Slack, O365's response to Google Workspace), and ecosystem deepening, which will similarly apply to potential impacts from the "Agentic AI" ecosystem.