Microsoft closed fiscal year 2026 on June 30 with a fourth quarter that exposed the financial volatility of its AI investment portfolio. The company booked a $3.2 billion gain on its Anthropic stake and a roughly $600 million write-down on its OpenAI position in the same quarter, producing a net swing of about $2.6 billion in investment gains that flowed directly through the income statement (TechCrunch, 2026-07-29).

The Anthropic gain added $0.33 to diluted earnings per share in Q4, while the OpenAI writedown subtracted approximately $0.07. Microsoft reported Q4 diluted EPS of $4.81 on $90 billion in revenue and $35.8 billion in net income (TechCrunch, 2026-07-29).

For the full fiscal year, the picture flips. The OpenAI position generated a $5 billion gain across FY2026, contributing $0.67 to the annual diluted EPS of $17.95. Microsoft's full-year revenue was $331.8 billion with net income of $133.7 billion. The Q4 OpenAI markdown, in other words, trimmed a portion of gains recognized earlier in the fiscal year (TechCrunch, 2026-07-29).

The trajectory of the OpenAI investment across the four quarters was far from smooth. In Q1 FY2026, net losses from the OpenAI position pulled down net income and diluted EPS. Q2 brought a sharp reversal: net gains from the OpenAI investment increased net income by $7.6 billion, alongside revenue of $81.3 billion, up 17% year over year (Microsoft Investor Relations, 2026-01-28). Q3 saw net losses from the OpenAI position again decrease net income. Then Q4 delivered the $600 million markdown.

This is mark-to-market accounting applied to a privately held equity stake. Mark-to-market means the company adjusts the recorded value of an investment to reflect its current estimated worth, even though no shares were actually sold. The quarterly swings reflect changes in the assessed fair value of the OpenAI position rather than cash gains or losses.

Microsoft invested $5 billion in Anthropic in November 2025 as part of a strategic partnership that also involved Nvidia (Microsoft Blog, date unknown). Under the deal, Anthropic committed to purchasing $30 billion worth of Azure services. The $3.2 billion Q4 gain on that investment, recognized less than a year after the initial outlay, reflects a substantial upward revaluation of Anthropic's fair value between November and the June 30 fiscal year close. Microsoft does not update the carrying value of its Anthropic investment every quarter, but it does discuss its OpenAI investment quarterly (TechCrunch, 2026-07-29).

Microsoft owns approximately 27% of OpenAI (OpenAI, date unknown). On October 28, 2025, Microsoft filed an 8-K with the SEC regarding a blog post titled "The next chapter of the Microsoft-OpenAI partnership," signaling an updated framework for the relationship (SEC, 2025-10-28). An 8-K is a formal filing companies must submit to regulators when shareholders need to be informed of a significant event.

The accounting treatment here matters for anyone modeling Microsoft's earnings. The OpenAI position's fair-value adjustments have swung net income by billions in either direction across consecutive quarters, and those movements land in reported EPS without corresponding changes in operating cash flow. A Q2 that shows a $7.6 billion gain from OpenAI and a Q3 that shows losses from the same investment are not contradictory signals about OpenAI's business performance in those periods. They are quarterly snapshots of a valuation that moves with private-market funding rounds, comparable-company multiples, and Microsoft's own assessment of the stake's recoverable value.

The Anthropic situation is structurally different because Microsoft does not mark that position quarterly. The $3.2 billion gain appeared because the November 2025 investment was being valued for the first time at a fiscal-year close, and the revaluation was large enough to move diluted EPS by $0.33 on its own. Future quarters may or may not bring similar Anthropic adjustments; the company's disclosure practice leaves that ambiguous by design.

What this means for forward-looking analysis is that Microsoft's reported EPS now carries an embedded investment-portfolio volatility component that is separate from the operating performance of its Azure, Microsoft 365, and other business segments. The $90 billion Q4 revenue figure and the $331.8 billion full-year revenue figure reflect operating performance. The gap between operating results and net income is where the AI investment mark-to-market effects sit, and that gap has been wide enough in multiple quarters to move the needle on a $133.7 billion annual earnings base.

The broader question for investors and analysts is whether these investment gains and losses are a transitional feature, reflecting the early-stage nature of Microsoft's Anthropic position and the still-settling valuation of OpenAI, or a persistent characteristic of holding large equity stakes in privately held AI labs. Microsoft has structured both relationships to serve its Azure consumption goals: the $30 billion Azure commitment from Anthropic and the OpenAI partnership's cloud infrastructure arrangement tie the investment thesis to cloud revenue growth, not just equity returns. Whether the equity gains stabilize as these companies mature or continue to swing with private-market valuations will be visible in the quarterly disclosures, at least for OpenAI.