Microsoft CEO Satya Nadella says Copilot usage is rising despite fears over heavy AI investment

Microsoft posted a strong set of quarterly earnings on Wednesday, reporting revenue of $81.3 billion, up 17% year-on-year, net income of $38.3 billion, up 21%, and record Microsoft Cloud revenue exceeding $50 billion. However, the company’s shares came under pressure the following day as investors expressed concerns over the scale of its cloud and artificial intelligence investments and questioned whether the spending would generate sufficient returns.

Chief executive Satya Nadella sought to address those concerns during the company’s earnings call, stating that Microsoft’s investments were translating into rising usage of its artificial intelligence products, particularly Copilot, and would ultimately support long-term growth.

Microsoft has already spent nearly as much on capital expenditure in the first half of its current financial year as it did across the entirety of the previous year. The company spent $88.2 billion on capital expenditure last year and has spent $72.4 billion so far this year. Much of that investment has gone towards building infrastructure to support AI workloads for enterprise customers and major AI labs, including OpenAI and Anthropic.

Investor unease has been driven by fears that the heavy spending may not convert into higher usage or profits, particularly as growth in Microsoft’s core enterprise cloud platform Azure and its Microsoft 365 applications fell short of some market expectations.

According to TechCrunch, reports earlier this year suggested that adoption of Microsoft’s AI products had been slower than anticipated, despite Copilot being embedded across a wide range of Microsoft services. Nadella spent a significant portion of the earnings call countering that narrative, highlighting usage growth across the company’s AI portfolio.

He informed that daily users of Microsoft’s consumer-facing Copilot products had grown nearly threefold year-on-year, encompassing AI chats, news feeds, search, browsing, shopping and operating system integrations. However, he did not disclose absolute user numbers. Microsoft previously stated in its annual report that Copilot had surpassed 100 million monthly active users, a figure that included both enterprise and consumer customers.

Nadella provided more detailed figures for GitHub Copilot, Microsoft’s coding-focused AI tool, stating that it now has 4.7 million paid subscribers, representing 75% growth year-on-year. The company had earlier reported that GitHub Copilot had 20 million total users, including those on the free tier.

He also said that Microsoft 365 Copilot has reached 15 million paid seats sold to corporate customers, out of a total base of 450 million paid Microsoft 365 seats, as the company continues to push AI tools deeper into its productivity software.