Microsoft is reportedly renegotiating its partnership with OpenAI the creator of ChatGPT to help the company move closer to a future initial public offering (IPO). This news sent Microsoft’s stock climbing on Monday, rising 1.1% to $443.47, showing how much attention this development is drawing from investors.

According to a report by the Financial Times, Microsoft and OpenAI are not only working on changes that could open the door for an IPO, but are also rewriting the broader terms of their original contract, the one they signed back in 2019, when their exclusive partnership first began.

As of now, neither Microsoft nor OpenAI has officially commented on the report. When contacted by Barron’s, both companies declined to respond.

Behind the Billion-Dollar Deal

The last major update on this partnership came in January, when Microsoft revealed that it had lost its role as OpenAI’s sole cloud provider. However, at the same time, the tech giant confirmed that OpenAI had made a “new, large commitment” to Azure, Microsoft’s powerful cloud platform tailored for AI.

More recently, OpenAI made headlines again by dropping a plan to shift its business fully under a for-profit structure. This decision followed discussions with civic leaders and the attorneys general of California and Delaware  showing that the company is balancing profit with responsibility.

Why Microsoft Shares Are Climbing

After this partnership update broke, Microsoft shares jumped to $443.47, marking a 1.1% increase. But that wasn’t the only reason for the stock’s movement. On the same day, the U.S. government announced a move to temporarily reduce additional tariffs on Chinese imports from 145% to 30%, giving tech stocks an extra lift.

The positive sentiment wasn’t limited to Microsoft:

  • S&P 500 was up 2.6%
  • Nasdaq Composite surged 3.4%

Future of AI? Microsoft Backs OpenAI’s IPO Ambitions

This revised agreement could give OpenAI the path it needs to eventually go public, a move that would shake up the AI industry. For Microsoft, it means tightening its relationship with one of the leading AI firms while growing its Azure cloud platform in the process. Investors should keep a close eye on future updates. If this deal leads to an IPO and continues to strengthen Microsoft’s AI position, it could be one of the biggest shifts in tech investing this year.