Microsoft-OpenAI Rift May Cap Stock Upside Potential

Key Points

• Microsoft stock is near all-time highs, but technical signals like a bearish MACD crossover and overbought RSI suggest short-term exhaustion.
• Tensions between Microsoft and OpenAI over IP access and AI strategy could weigh on the stock and invite regulatory scrutiny.
• Anticompetitive concerns and potential AGI claims by OpenAI could accelerate a regulatory review of Microsoft’s AI investments.

Microsoft Corporation NASDAQ: MSFT stock is up 23% in the last three months and is now at an all-time high of around $478.

At times like this, it’s normal for investors to consider taking some profits. Some technical signals point to the potential that the rally is getting tired.

However, MSFT stock is one of the clear winners in the market this year.

That means investors may believe the stock may move higher.

MSFT Showing Signs of Short-Term Exhaustion

MSFT stock is in a strong uptrend. However, two technical indicators suggest the stock may be due for a breather. The MACD (moving average convergence divergence) line has crossed below the signal line. This signals a potential shift in momentum even as the overall trend strength remains intact.

Meanwhile, the RSI reading of 72.96 places the stock firmly in overbought territory. Any reading above 70 is often a precursor to short-term consolidation or a mild pullback.

Traders may want to wait for a dip or a period of sideways action before initiating new positions. Long-term investors, however, may view any weakness as a buying opportunity within a strong bullish trend.

The Fragile Partnership Is Showing Signs of Strain

The wildcard for Microsoft stock in the short term may come from its partnership with OpenAI. The relationship between the two companies has been fraying for much of the last year. Those tensions appear to be reaching a boiling point that may keep a cap on MSFT stock.

The fact that the interests of Microsoft and OpenAI would diverge isn’t surprising. However, the rift is becoming more defined as the partners become competitors.

Microsoft was initially content to supply the cash and data centers for this AI partnership. But recently, it’s been developing its own AI models. OpenAI is working with other companies to develop multi-cloud access and is raising billions of dollars as it pushes to become a for-profit company.

Microsoft has shown no signs of endorsing that move. This hesitancy reflects Microsoft’s rights in OpenAI’s intellectual property. That includes Windsurf, which OpenAI purchased for $3 billion in 2024. That’s where OpenAI’s objections come in. OpenAI doesn’t want Microsoft to access Windsurf due to concerns about anti-competitive practice.

Overlaying all of this is OpenAI founder Sam Altman’s suggestion that ChatGPT5 will have artificial general intelligence (AGI). This is the idea that AI could meet or exceed human intelligence over a wide range of tasks. If that’s the case, then the partnership between the two companies would end contractually.

And that’s where the real drama comes in. Microsoft doesn’t want its $13 billion investment in OpenAI to unravel too quickly. But OpenAI needs to ensure it doesn’t forfeit the $20 billion it raised through its latest round of funding.

Many analysts believe that Microsoft could acquire OpenAI in the next three years, which may be the end game for Microsoft. All of this is leading to OpenAI claiming that Microsoft is engaged in anticompetitive business practices. That’s likely to draw the attention of federal regulators.

The OpenAI Dispute Could Lead to a Regulatory Review

Regulatory reviews are rarely good news for companies. Yet despite a pro-business administration in 2025, Congress continues to be in a regulatory mood regarding technology stocks.

That’s been the case for much of the Magnificent Seven stocks, including Alphabet Inc. NASDAQ: GOOGL, Apple Inc. NASDAQ: AAPL, Meta Platforms Inc. NASDAQ: META, and Amazon.com Inc. NASDAQ: AMZN. Lawmakers are even looking closely at NVIDIA Corp. NASDAQ: NVDA over concerns of monopolistic practices.

Microsoft hasn’t been immune to scrutiny. In fact, the partnership with OpenAI is causing regulators to raise questions over whether the company’s relationship is a merger in everything but name.

However, now that OpenAI is making noises about anticompetitive accusations, regulators may turn their attention more exclusively to Microsoft for potential violations of antitrust law.