Microsoft's $3.2B Anthropic gain surpasses Windows and Xbox operating income combined

Microsoft logs $3.2B from Anthropic investment, but OpenAI was a mixed bag

When Microsoft reported killer fourth-quarter earnings for its fiscal 2026 year (which ended June 30), it tucked in an interesting little tidbit about how its investments in the two biggest, and competing, AI labs are doing. For the quarter, it recorded its investment in Anthropic as a $3.2 billion gain, boosting diluted earnings [er share by 33 cents. (Microsoft reported diluted earnings per share of $4.81 for the quarter). Microsoft invested $5 billion in Anthropic in November 2025 as part of a circular agreement under which the AI lab also agreed to buy $30 billion worth of Azure services. Microsoft does not routinely update the value of its Anthropic investment each quarter. It does, however, discuss its OpenAI investment quarterly. Microsoft said investment did not fare nearly as well in the quarter, and marked it down about $600 million, reducing diluted EPS by about 7 cents per share. Microsoft owns about 27% of OpenAI. And while Microsoft also receives revenue-share payments, it doesn't report how much OpenAI pays under that arrangement. Instead, Microsoft accounts for the value of its investment. While this quarter brought a pretty sizable decline in the value of that investment, the $600 million write-down was still mostly a rounding error for Microsoft. The company delivered a highly profitable quarter, reporting $90 billion of revenue and net income of $35.8 billion for the quarter. Microsoft's revenue was $331.8 billion with a net income of $133.7 billion for the year. Microsoft's OpenAI investment looks much better when viewed on a full-year basis. For the year, Microsoft's OpenAI investment generated a $5 billion gain and added $0.67 on EPS, respectively, the company reported. (Microsoft reported $17.95 EPS for its fiscal year.) Still, it is noteworthy that Microsoft reported nearly as much of a gain on Anthropic in one quarter as it did for the year on OpenAI for the entire year. In fact, it is so noteworthy that Microsoft disclosed it.

Microsoft's Anthropic Gain Beat an Entire Business Segment - Microsoft (NASDAQ:MSFT)

Chief Financial Officer Amy Hood disclosed that Microsoft recorded a $3.2 billion gain from its investment in Anthropic during the quarter. The windfall was so large that it exceeded the $2.748 billion of operating income generated by Microsoft's entire More Personal Computing segment, which includes Windows, devices, Xbox and search advertising, by about 16%. Anthropic Delivers A Bigger Profit Than Windows, Xbox Segment The gain wasn't part of Microsoft's core operations. Instead, Hood listed it among the items that boosted quarterly earnings beyond the company's previous guidance. "These included a $3.2 billion gain from our investment in Anthropic and lower than expected expenses related to the voluntary retirement program, which were partially offset by severance expense and impairment charges in Xbox," Hood said during the earnings call. By comparison, Microsoft's More Personal Computing division generated $12.85 billion in quarterly revenue but just $2.748 billion in operating income, as weakness in Windows OEM and Xbox continued to weigh on profitability. The segment remains one of Microsoft's three reporting divisions, housing products including Windows, Surface devices, Xbox gaming and Bing search. Microsoft's AI Strategy Extends Beyond OpenAI The Anthropic gain also highlights how Microsoft's AI strategy has expanded well beyond its closely watched partnership with OpenAI. While OpenAI remains central to Microsoft's AI ambitions, CEO Satya Nadella repeatedly emphasized that the company is building an AI platform designed to support multiple frontier model providers. "We offer the broadest model catalog in the cloud with over 11,000 models, including the latest from OpenAI, Anthropic, Mistral, xAI, as well as our own MAI family," Nadella said. Microsoft also disclosed that customers are increasingly embracing that approach. AI Investments Continue To Pay Off The Anthropic gain arrived alongside another strong quarter for Microsoft's AI business. Azure and other cloud services revenue climbed 43% year over year, helping Microsoft Cloud revenue surpass $214.4 billion for the fiscal year. Commercial remaining performance obligations rose to $678 billion, reflecting continued demand for Microsoft's cloud and AI offerings. During the call, Nadella also reiterated that Microsoft is designing its AI infrastructure so enterprises are not locked into any single model provider. "It also has the added benefit of business continuity and resilience because every model is substitutable," he said while describing Microsoft's multi-model AI architecture. For investors, the quarter underscored an increasingly diversified AI strategy. Microsoft isn't just generating revenue by selling AI infrastructure and software -- it is also benefiting financially from investments in companies helping shape the next generation of artificial intelligence. Image via Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.