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Microsoft (MSFT) is riding high. The company reported better-than-anticipated fourth quarter results after the bell last week, winning over investors who had soured on the Windows developer’s stock.
Microsoft has been hounded for much of the year over questions about when its massive AI investments would begin to pay off and whether its Copilot AI software was gaining traction among its vast customer base.
Now it looks as though that’s beginning to happen, with the company saying it now has more than 30 million paid Microsoft Copilot 365 seats. Azure revenue also grew 43% last quarter, and growth is expected to continue to accelerate through the first half of Microsoft’s fiscal 2027.
However, Bloomberg reported on Wednesday that the bulk of Microsoft’s AI growth came from OpenAI (OPAI.PVT), adding to concerns about too much revenue concentration around a small set of AI companies.
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Despite that, Microsoft’s results helped boost Wall Street’s confidence in the company’s AI plans. While shares of Microsoft underperformed the broader S&P 500, as well as peers Google and Amazon over the last 12 months, the stock turned positive year to date following the company’s earnings announcement.
Microsoft stock is up some 25% since reporting its results, outpacing Amazon (AMZN), Google (GOOG, GOOGL), Meta (META), and Oracle (ORCL) in the same period.
Microsoft executive vice president of Copilot Charles Lamanna partially attributes the service’s growth to its integration with existing Microsoft apps, including Teams and Outlook; its ability to securely tap into users’ data; and the fact that the company designed Copilot to use multiple AI models.
“Customers are nervous committing to an application platform or an agent platform where they’re locked into one model family because they see just how competitive and dynamic the model landscape is,” he told Yahoo Finance.
Interactions with Copilot are also increasing, Lamanna said.
“Year over year, we’ve nearly doubled the number of conversations people are having with Copilot, and we’re seeing that we’re driving substantial business impact and results for our customers. It’s now at the same level of engagement as Outlook in teams, which are staples of the typical office worker, and Copilot’s right there next to them,” he added.
Microsoft isn’t the only company looking to score big using AI in productivity settings. OpenAI and Anthropic are also diving into the space with GPT Work and Claude Cowork, respectively. Google also continues to expand Gemini in its Google Workspace service.
