Microsoft reportedly seeking to acquire AI startups after pouring $100 billion in OpenAI

The company is reportedly in talks to acquire the AI startup Inception for roughly $1 billion.

The AI race among Big Tech companies is no longer limited to introducing more advanced AI models and smarter chatbots. These companies are now competing to acquire smaller AI startups to leverage their technology and talent to strengthen their own AI efforts. Microsoft, an early investor in OpenAI, is now looking to add more AI startups to its portfolio.

According to a Reuters report citing five people familiar with the matter, Microsoft has begun searching for AI startups that may be open to acquisition by the software giant. The company’s goal is to bring in AI talent from these startups while also using their technology to develop in-house cutting-edge AI models.

One of the AI startups in Microsoft’s sights is Inception, a 2024-founded company led by a group of Stanford University graduates focused on developing large language models. In late 2025, Microsoft invested in Inception through its venture fund M12. Inception's founders are reportedly looking for a price of over $1 billion. However, discussions are still ongoing, and no deal has been finalized yet.

Microsoft was an early investor in OpenAI in 2019, and since then, the software giant has invested roughly $100 billion in the ChatGPT creator. Meanwhile, OpenAI has recently begun loosening its ties with Microsoft and has signed new cloud and investment agreements with other tech giants, including Amazon.

At the same time, Microsoft has intensified efforts to reduce its reliance on OpenAI’s models by developing more in-house large language models (LLMs). Acquiring AI startups and their talent will also help the Redmond-based firm to diversify its partnerships beyond OpenAI.

Last month, SpaceX, led by Elon Musk, announced a partnership with the AI coding startup Cursor, along with an option to acquire the company for roughly $60 billion. However, reports later revealed that Microsoft had previously explored acquiring Cursor before SpaceX, but ultimately decided not to proceed with a bid due to concerns about regulatory scrutiny.