Microsoft faces scrutiny over AI spending as Copilot adoption lags

In brief: Microsoft will uncover its quarterly financial results connected Wednesday, and it mightiness not beryllium a precocious constituent for nan Redmond giant. Analysts expect Microsoft to study its slowest quarterly gross maturation successful a year, and erstwhile again location are concerns astir really overmuch money nan institution is investing successful AI erstwhile nan request and returns aren't justifying its outlay.

Microsoft has invested astir $13 cardinal successful ChatGPT-maker OpenAI since 2019, but we've been proceeding reports since April that investors are concerned that reaping nan financial rewards is taking longer than expected.

Reuters reports that Morgan Stanley analysts opportunity location is simply a "wall of worry" astir Microsoft's net owed to "ramping superior expenditures, separator compression, deficiency of grounds connected AI returns, and messiness station a financial resegmentation."

One of nan biggest AI-related disappointments for Microsoft is Copilot. The institution has been pushing its AI devices incredibly hard, going arsenic acold arsenic adding a dedicated button to its latest laptops, but astir group are apathetic toward Copilot, pinch nan astir communal title reportedly that it's not arsenic good arsenic ChatGPT.

In September, Salesforce CEO Marc Benioff said Copilot is fundamentally nan caller Microsoft Clippy, and that customers had not gotten worth from it.

Microsoft's banal value complete nan past six months

A study of 152 accusation exertion companies carried retired by investigation patient Gartner successful August recovered that nan mostly of them had not progressed their Copilot initiatives past nan aviator stage.

Microsoft could boost Copilot uptake done an endeavor instrumentality it unveiled past week. Microsoft Copilot Studio lets clients build AI agents that tin automate soul tasks, fulfilling nan sorts of administrative roles usually performed by employees. That's evidently brought a batch of disapproval astir AI replacing quality workers, though Microsoft claims it will automate tedious tasks, freeing labor to attraction connected other, much important things, for illustration looking for a occupation earlier they're replaced, probably.

Microsoft's banal value is up 14% this year, but it has only risen astir 1% since precocious July, underperforming nan benchmark S&P 500. While nan Azure cloud-computing portion apt grew by 33% successful nan fiscal first quarter, matching institution expectations, it is little than successful nan 4th quarter.

Microsoft's full gross is expected to person risen 14.1% to $64.51 billion. It says that spending connected AI exertion will stay high.

It was reported past week that Microsoft CEO Satya Nadella has seen his take-home salary increase by 63% compared to past twelvemonth contempt nan CEO requesting nan magnitude he receives beryllium reduced. While Nadella's net was trim by 50%, different forms of his compensation accrued significantly.