Microsoft Is Losing The AI Dream

Copilot's adoption numbers are getting harder to defend, Azure's growth story has an asterisk, and the chart called the decline months ago.

Does Microsoft Have A Chance At AI?

In early February, I laid out the case Microsoft MSFT 0.00%↑ and Meta Platforms META 0.00%↑ were taking fundamentally different paths to AI monetization, and sentiment was already moving in different directions for each, with Meta having unfinished upside going into earnings while Microsoft had just completed a corrective bounce and was setting up for a meaningful decline. The charts played out exactly as sentiment suggested, and now we find ourselves at the next fork in the road.

But before we get to the chart, the fundamental picture for Microsoft has continued to deteriorate since my last coverage.

The Access Model Struggles To Convert, But Microsoft Struggles Harder

While Microsoft hasn’t reported a new set of metrics since my last article, the recent industry picture and channel checks reflect what I see firsthand in my day job and professional use of these tools. But even beyond my hands-on use, the numbers imply a bigger failure underneath the surface. Thus, the fundamental picture for Microsoft hasn’t improved; if anything, it has gotten harder to defend a turnaround, let alone the bull case.

One key piece is Copilot, the flagship Microsoft AI product.