Microsoft executive touts Copilot sales traction as AI anxiety weighs on stock

Microsoft is witnessing a notable rise in sales of its Copilot AI add-on for business clients, despite earlier concerns regarding its adoption rates. Executive Judson Althoff shared this positive development with employees, highlighting that the company is turning around its fortunes after facing scrutiny. This year has been turbulent for software companies, including Microsoft, as fears surrounding the competitive landscape of generative AI models have impacted stock prices. For instance, Microsoft's shares saw a significant decline of 23% in the first quarter. In response, the tech giant has increased its investments in data centers to better serve cloud customers like OpenAI, as investors look for signs that AI-enhanced products will lead to improved revenue and profitability. In January, Microsoft reported achieving 15 million seats for its Microsoft 365 Copilot, which integrates with its productivity software subscriptions, translating to 3% of the available seats in standard bundles. Corporate users of Microsoft 365 now have access to a Copilot Chat assistant, although its features remain limited. CEO Satya Nadella noted during an earnings call that the company has seen significantly more enterprise chat users than initially anticipated. The Microsoft 365 Copilot, priced at $30 per month, became broadly available in 2023. Since its launch, some analysts have characterized its adoption as still in the early stages. Following the January announcement, UBS analysts, who continue to advocate for Microsoft shares, expressed expectations for a stronger subscriber base. In light of feedback from analysts, Microsoft has adjusted its strategy to better encourage the use of Copilot Chat while working to secure paid subscriptions. Althoff mentioned in a town hall meeting that he and Amy Hood, the company's finance chief, had set ambitious goals for the March quarter, which were successfully met. Looking ahead, Althoff expressed confidence in the new targets set for the June quarter, indicating optimism for continued growth in this sector.