From OpenAI to Anthropic, Microsoft's new AI empire emerges!
Microsoft, in collaboration with NVIDIA, has invested in OpenAI competitor Anthropic and reached a computing power underwriting agreement. Morgan Stanley interprets that this move confirms Microsoft's generative AI narrative is not limited to OpenAI, and its valuation is significantly underestimated by the market; HSBC points out that Microsoft is shaping Azure into an all-encompassing AI platform through an "enemy-friend" model, providing greater imaginative space for its valuation
Microsoft is making a new move in its artificial intelligence chess game by deepening cooperation with Anthropic, a major competitor of OpenAI, shifting its AI strategy from a single core bet to a more diversified platform layout.
According to news from the Chase Trading Desk, on November 18 local time, Microsoft and NVIDIA announced a joint investment in the AI startup Anthropic, amounting to $5 billion and $10 billion, respectively. In exchange, Anthropic has committed to purchasing $30 billion worth of Microsoft Azure cloud computing power in the future. Additionally, several cutting-edge large language models under Anthropic, including Claude Sonnet 4.5, will be more widely integrated into Microsoft's Azure AI Foundry and Copilot series applications.
Morgan Stanley interprets this move as evidence that Microsoft's generative AI story is not limited to OpenAI, and that the company's valuation remains attractive compared to its peers; HSBC pointed out that Microsoft is building a comprehensive AI platform through a "frenemy" model to meet customer demands for multiple model choices.
Morgan Stanley: Beyond OpenAI, Microsoft's AI Story Welcomes a New Chapter
Regarding this cooperation, Morgan Stanley noted in its latest research report that there has long been a misconception in the market that Microsoft's AI growth is entirely tied to OpenAI.
Analyst Keith Weiss believes that Microsoft's announcement strongly corrects this view—“Microsoft's story is not just about generative AI (GenAI), and the generative AI story is also not just about OpenAI.”
Analyst Keith Weiss stated that the announcement of the expanded cooperation with Anthropic, including Anthropic's commitment to purchase $30 billion in Azure capacity and Microsoft's investment of up to $5 billion, further broadens Microsoft's business vision.
The firm's analysts believe that this initiative demonstrates Microsoft's strong positioning in several long-term growth drivers, including:
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Generative AI (Microsoft is the biggest winner in wallet share growth);
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Enterprise workloads migrating to the public cloud (also the biggest winner in share growth);
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Cybersecurity (the largest vendor in this field, with revenues exceeding $40 billion).
Morgan Stanley emphasizes that Microsoft's stock is currently undervalued, trading at about 25 times the firm's forecasted earnings per share for fiscal year 2027 (approximately $20.40), lower than the 30 times price-to-earnings ratio of large software peers. Therefore, the firm reiterates its "Overweight" rating on Microsoft and lists it as a "Top Pick" in the large software sector, with a target price of $650.00. This target price represents a potential upside of over 30% from the current level.
HSBC: The AI Market is Evolving into a "Frenemy" Dynamic, Highlighting the Value of the Azure Platform
HSBC's research report interprets the industry competitive landscape, believing that the AI market is evolving into a "frenemy" model. The report mentions that OpenAI, which Microsoft has deeply partnered with, has also reached a $38 billion infrastructure agreement with Amazon AWS, while Anthropic itself has received investments from both Amazon and Google.
The report suggests that Microsoft's collaboration with Anthropic, on one hand, reduces its single dependence on OpenAI and broadens the AI supply chain; on the other hand, it significantly strengthens Azure's positioning as a "multi-AI model platform," meeting enterprise clients' demand for flexibility in model selection.
The bank believes that the demand for model flexibility among enterprise clients is increasing. By expanding the AI supply chain, Microsoft not only retains clients who want to experiment with different models but also locks in substantial future revenue through computing power contracts. HSBC maintains a "Buy" rating on Microsoft, raising the target price to $667, believing that Microsoft has ample data, infrastructure, and AI integration capabilities to coordinate this increasingly complex ecosystem.
Microsoft's collaboration with Anthropic expands its footprint in the AI field but does not change its core partnership with OpenAI. Microsoft CEO Satya Nadella stated in a video released on Tuesday:
"We will increasingly become each other's customers — we will use Anthropic's models, they will use our infrastructure, and we will go to market together. Of course, all of this is built on our partnership with OpenAI, which remains a key partner for Microsoft."
Concerns Over "Circular Financing" Model, Market on Alert for AI Bubble Risks
Despite the positive evaluations from the two major Wall Street firms, the AI bubble theory has also gained traction at the time of this deal. Wallstreetcn previously wrote that this cooperation model is interpreted by the market as a form of "circular financing" or "AI closed loop": chip and cloud service giants (NVIDIA, Microsoft) invest in model developers (Anthropic), while model developers use the funds obtained to purchase chips and cloud services from the former.
This model of capital circulating within the system has led some investors to question whether AI products can generate sufficient actual revenue to support their high investments. Data from Bank of America shows that 45% of fund managers view the "AI bubble" as the biggest "tail risk" in the market.
In fact, on the day the collaboration was announced, both Microsoft and NVIDIA's stock prices fell nearly 3%, reflecting Wall Street's concerns about industry overheating to some extent. For investors, while being optimistic about Microsoft's AI strategic layout, it is also necessary to remain vigilant about the sustainability of this model and the potential risks of a market bubble
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