Microsoft's AI Push: Frontier Unit & OpenAI IPO Bet

Microsoft is making two big moves to boost its stock. The company launched a new specialized unit, the Microsoft Frontier Company, which is deploying 6,000 engineers and experts. This unit will build custom AI systems directly at client sites. Microsoft promises customer data will not be used to train its own AI models. Here's the thing: Microsoft's shares are the worst performing among large-cap tech names this year. The stock closed Friday at 342 euros, down about 15% since January. The company plans capital expenditure of $190 billion in 2026, a 63% jump from the prior year. This spending is for building AI infrastructure. What's interesting is that a potential OpenAI IPO could be a major factor. OpenAI has reportedly filed for a public offering targeted for 2027, aiming for a valuation above $1 trillion. Microsoft holds roughly a 27% stake in OpenAI. At that valuation, Microsoft's holding would be worth approximately $270 billion. This amount is equivalent to nearly 9% of Microsoft’s current market capitalization. The bottom line: All eyes are on Microsoft's upcoming earnings report. The company needs to show that its cloud profits can cover its significant AI investments.