Microsoft CFO says OpenAI investment will cut into profit this quarter [Video]

Microsoft‘s massive investment in OpenAI is weighing on earnings.

Following Microsoft’s quarterly earnings report on Wednesday, CFO Amy Hood said she expects the company to take a $1.5 billion hit to income in the current period, mainly because of an expected loss from OpenAI.

Microsoft has invested close to $14 billion in OpenAI, whose ChatGPT assistant has gone viral and inspired a whole new industry called generative artificial intelligence. The trend has generated billions of dollars in new revenue for Microsoft.

But OpenAI is losing bundles of cash. The company expects $5 billion in losses this year, before stock-based compensation, on $4 billion in revenue, The Information reported earlier this month, citing documents.

Hood said that for Microsoft, the loss is accounted for under the equity method. The accounting approach refers to a company’s share of the invested company’s profit or loss in a given period, a Microsoft spokesperson said.

The additional detail is “not due to a change in our …