Satya Nadella claims Copilot AI usage is surging despite investor concerns

Microsoft posted strong financial results in its latest earnings report, but investor concerns about heavy spending on artificial intelligence (AI) infrastructure overshadowed the upbeat numbers. 

The company reported $81.3 billion in quarterly revenue, up 17% year over year, and net income of $38.3 billion, an increase of 21%. Microsoft also posted record cloud revenue of more than $50 billion for the quarter.

Despite the performance, Microsoft shares fell as investors questioned whether the company’s massive investments in cloud and AI infrastructure would generate sufficient returns. 

Chief executive Satya Nadella addressed those concerns directly during the earnings call, arguing that demand for Microsoft’s Copilot AI tools is growing rapidly and justifies the spending.

Microsoft’s capital expenditures have surged, nearly matching last year’s total in just the first half of the current fiscal year. 

The company spent $88.2 billion on capital expenditures in the prior year and has already invested $72.4 billion this year. 

Much of that spending has gone toward supporting AI workloads for enterprise customers and major AI partners, including OpenAI and Anthropic.

Investors remain uneasy about growth in Microsoft’s core cloud and productivity businesses. Azure and Microsoft 365 both missed some expectations, which analysts flagged as a near-term concern.

Nadella sought to counter skepticism around AI adoption, stating that daily users of Microsoft’s consumer Copilot products have increased nearly threefold compared with a year earlier. However, he did not provide specific user counts. 

Microsoft previously reported surpassing 100 million monthly active Copilot users, a figure that combines both consumer and enterprise customers, leaving questions about standalone consumer adoption unanswered.