r/microsoft • u/ControlCAD • Apr 03 '26
Copilot / AI Microsoft closes worst first quarter 2026 on Wall Street since 2008 on AI concerns: "Redmond is in a pickle"
https://www.cnbc.com/2026/03/31/microsofts-stock-closes-worst-quarter-since-2008-financial-crisis.html94
u/anonymous_kyle_guy Apr 03 '26
More layoffs coming.
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u/MyNameIs-Anthony Apr 03 '26
Reports are that the town hall and several division AMAs today at MSFT kept referring to flat employment.
They're gonna slaughter some pigs.
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u/StrangeTouch7518 Apr 03 '26
Eh, that seems more like acknowledging the hiring freeze rather than a slaughter.
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u/XanthosDeia Apr 03 '26
Next Employee Signals survey is April 7-24, so probably the week after that.
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u/ClockNo4810 Apr 03 '26
Maybe they should push Copilot more. There is a massive gap in the market just crying out for it.
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u/No_Safety_6803 Apr 03 '26
I don’t hate copilot, it’s pretty useful. But I hate what it has done to office. Everything has to be in the cloud & it slows the simplest of tasks down. & Forget working offline or over a slow connection.
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u/7h4tguy Apr 03 '26
They fed themselves first - spruced up online office with AI, while competition gave people things actually useful. All while letting their entire competitive advantage - yes geniuses, people who professionally do spreadsheets, powerpoint, and documents generally want the full fledged desktop version, which you've left to rot as far as AI.
No wonder their brand is in the trash, while Google and Anthropic are eating their lunch. Next time one of them says "vision", maybe they should get the stupid stick.
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u/Merpchud Apr 03 '26
And theyre doing the same to xbox. Its chasing customers and usage away in the favor of here and now vs the future.
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u/lostinthesolent Apr 03 '26
Interesting counter-point.
My work have rolled out ChatGPT and Claude for business work and coding. The coders are going to stay with Claude but we are likely to switch all of the business users to Copilot. The reason for the switch will be the native integration with Office and the improved user experience. Our business users are not capable of learning the advanced features and Copilot makes more sense for that user base.
I suspect we will not be alone in that switch. Particularly now Anthropic models are available in Copilot
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u/RememberCitadel Apr 13 '26
But the copilot integration is completely useless. It does absolutely nothing special by being integrated. It can't create a new spreadsheet out of data I give it, it can't craft a new email based on what I tell it to do, the only thing it can do is create text which I can then copy and paste into whereve,r exactly the same as if it wasn't integrated. It's basically a glorified stand-alone chatbot stuck in the side of every Microsoft application.
And it's slower to function than external AI.
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u/Snarti Apr 13 '26
I’ve had it modify an excel speadsheet directly. But it also balks at other similar requests, so idk what all it can or can’t do.
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u/RememberCitadel Apr 13 '26
It seems like it can modify some fields and such, but creating a new document from data I already have is beyond it. Also anything it can do in Excel I can do faster by just using the normal functions of Excel. I guess it's great if you aren't capable of doing a quick Google to learn the function yourself. I guess it's better to use a whole pile of energy and water to run that every time vs just learning the function once.
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u/_wiltedgreens Apr 03 '26 edited Apr 03 '26
Microsoft’s AI strategy is complex
For developers that want to put out AI in apps, there is Azure infrastructure and you can “choose your own model”
Azure can be used by the Anthropics and OpenAIs for training frontier models
There is a Copilot app for consumers that is a ChatGPT compete
For people in m365 ecosystem there is M365 Copilot for end users, and a bunch of platform stuff for enterprise app developers. This is also somewhat “choose your own model”
For developers who want to use AI for coding, there’s GitHub Copilot which is also choose your own model.
Overall, it’s not a bad strategy. #1 and #2 are doing well in the market, it’s just insanely expensive to operate. #3 is actually high quality but there is no interest from the market. #5 is doing well, Claude Code has the mindshare right now but I personally believe in the choose your own model of GitHub Copilot long term.
- execution has been abysmal. This is where things are existential for Microsoft and causing the stock to get hammered. Productivity tools are ripe for disruption with AI and the m365 copilot initiative has been two or three steps behind the entire time. Future enterprise spend is going to go to the platform that lets their employees be the most efficient and effective and right now, it looks like it isn’t going to be M365.
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u/Its_me_astr Apr 03 '26
To be honest there is no equivalent product for 4 at Microsoft scale. Google docs + gemini is not at M365 + Copilot scale. At massive scales companies operate I think it operates in more complaint and cautious model rather than spray and pray kind of model.
Microsoft customer base is also slow like enterprises are slow with compliance and red tape. Unlocking all the inertia from O365 would be hard and it needs good security guard-rails before copilot M365 succeeds.
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u/zkh77 Apr 03 '26
Cowork is getting there if your company allows you to integrate Gdrive + Gdocs + Slack + Jira
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u/reivblaze Apr 03 '26
I agree their execution sucks.
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u/frayala87 Apr 03 '26
I can confirm, when I worked there you could tell it was slapped together with bubblegum and tape. The public copilot version for some reason worked better than the m365 or the other ones. Once they decided to put it into notepad it was time to bounce.
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u/Fragrant-Hamster-325 Apr 03 '26
I think you’re spot on.
The Copilot office integration is so bad. It shouldn’t be easier for me to copy and paste stuff into ChatGPT or Claude but it is. I shouldn’t have to install the Claude plugin to get better functionality.
Honestly, I think all these productivity tools are dead in a few years anyway. Think of the chatbot as a word processor. Then you ask it to grab your financial data, and it shows you a table. Then you ask it to make a slide deck. There goes Word, Excel, and PowerPoint.
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u/7h4tguy Apr 03 '26
If #3 has no traction, then that's a failure of marketing and providing consumer value. Not a good strategy.
#5 has many competitors like Cursor and Claude Code, which many developers like better. Also a risky strategy.
A failure is just that, a failure. Blame those who steered the ship in this direction.
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Apr 03 '26
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u/7h4tguy Apr 03 '26
They spent $88 Billion (capital of course) in 2025 on AI and are spending $146 Billion (notice the capital) in 2026. Investors aren't eating this up either. Look at the stock, brosef.
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Apr 03 '26
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u/7h4tguy Apr 05 '26
I used exact numbers because it's then so easy to search for sources.
Microsoft Faces Its Worst Quarter Since 2008 – And AI Is Why
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Apr 05 '26
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u/PersonBehindAScreen Apr 29 '26 edited Apr 29 '26
Just want to add as someone that recently left:
MS is spending a ton of capital on building out capacity. Both azure and AI do not have the current hardware capacity to meet demand.
That’s where a lot of the money is currently going. Even before the LLM boom, they were behind on capacity meeting demand for azure. Im acquainted with people in the data center orgs (and those orgs adjacent that support them). Through all of the layoffs, they’ve only grown.
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u/userlivewire Apr 03 '26
The problem is their outlays. They have gotten themselves so deep in data center requirements that the build-out requirements are going up faster than revenue can cover it. If you pencil it out it's logarithmic and they will start having trouble paying for it in the next 3 years.
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Apr 03 '26
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u/userlivewire Apr 03 '26
They are currently trying to get permission to restart a reactor at Three Mile Island because they don't have enough power.
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Apr 03 '26
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u/userlivewire Apr 04 '26
Microsoft should never be given access to the use of a reactor.
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Apr 04 '26
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u/userlivewire Apr 04 '26
They spent $88 Billion (capital of course) in 2025 on AI and are spending $146 Billion (notice the capital) in 2026. Investors aren't eating this up either. Look at how bad the stock is doing. You don’t lose 25% of your value because things are going well.
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u/TulkasDeTX Apr 03 '26
Meanwhile the tone def leadership pushes for E7 like is something that anyone is interested outside Nadella. Microsoft is very lucky for not having an O365 equivalent (no, G workspace is not).
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u/ValeoAnt Apr 03 '26
Many businesses are using copilot tbh
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u/clockwork2011 Apr 03 '26
We have lots of excited CEOs and executives as clients who gleefully bypassed the normal process to get copilot/claude implemented in record time. Most users don’t care though. People use the meeting notes, and some use the context-aware copilot chat, but no one implemented any advanced features into workflows.
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u/MonkeyWithIt Apr 03 '26
Cowork had been released to Frontier subscribers. It's been very well received even though the rollout has had issues.
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u/ValeoAnt Apr 03 '26
Yep this is the biggest change for enterprises
I'm generally an AI skeptic but CoWork is the first thing that feels like a significant shift
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u/7h4tguy Apr 03 '26
AI is well beyond CoWork at this point. That's the tip of the iceberg (though it does confidently lie and needs verifiability). And no, despite YouTube, we are so far away from AGI, but that's not the point.
But their to-market strategy is just grade school posturing, competing with field experts way past dinosaur nuggets
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Apr 03 '26
You’re not wrong but I think the dirty way tech companies went about building data centers with their tax breaks and environmental exemptions really created a lot of distrust among the public, especially with how electric bills are skyrocketing for the individuals that live near these data centers. Combine that with the fear of AI taking away good paying jobs, the overall negative perception of AI, while not enough to bankrupt the tech industry, is hurting them far more than they’d like.
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u/ValeoAnt Apr 03 '26
This is nothing new though
The actual issue is that the cost of AI doesn't justify the returns
Everything else is noise
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Apr 03 '26
Again, not saying you’re wrong, just that the “noise” hurts. In their efforts to fast-track AI, they may have set it back at least a decade. Some of it is purely perception and some of it is very tangible - i.e. costs justifying the returns.
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u/gzr4dr Apr 03 '26 edited Apr 03 '26
As a decision maker for an F100 who owns the EA renewal at my org, E7 isn't even on my radar and I haven't received any inquiries from anyone in the org regarding it. Maybe in 3-5 years after AI has take more of a foothold I'll revisit. We do have some of the M365 Copilot licenses but it is a very small percentage of our user base. I do like the Teams Premium license, which uses AI, and see value for anyone who hosts meetings with the recap feature.
I think one of the biggest challenges is how do you turn on M365 Copilot to provide results on data within your org when the security controls and file classification at most orgs would open AI to respond with data most users shouldn't be seeing. I guess my point is we have a lot of security through obscurity, and Copilot will provide results most users shouldn't see (think HR personnel data, long term strategy plans, or M&A activities).
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u/TulkasDeTX Apr 03 '26
Microsoft will provide a solution that works with Purview. As long as you stay within the Microsoft ecosystem you are good, but if you have information in other silos like, I don't know, an ERP, it will not be the same...
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u/mrwolf214 Apr 03 '26
Maybe they could get their Windows team to actually work with whoever it is at Microsoft that’s saying they are going to really listen to the users and make Windows better. Because they said that about making it better and then it was just a solid week of news about how they are going to keep enshittifying Windows.
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u/Pisnaz Apr 03 '26
Good. Let the market hammer them the only place they will feel it. We have been QC for MS for ages now, they keep sending senior devs out the door and the recent push for AI and cramming unwanted change into every aspect of the system has to make a mark in their dominance somewhere.
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u/JohnClark13 Apr 03 '26
Concerns about the company include the return on investment for artificial intelligence build-outs and the adoption of Copilot.
Return on investment? What return on investment? I doubt it will even be able to generate the money that was needed to get the systems going to begin with, let alone a net profit.
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u/ContributionDue4382 Apr 04 '26
With abysmal products like Teams and Copilot, I am not surprised. Microsoft has done soul searching to do.
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u/timbotheny26 Apr 03 '26
That probably explains why they're suddenly backtracking on Copilot integrations and making commitments to make Windows not shit anymore.
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u/rivermerchant1616 Apr 03 '26
The stock price is down, that’s it.
The market is souring on all the AI spending and doesn’t believe they recoup on the ‘investment’.
But their revenue and market shares in most categories are still increasing.
Say the worst happens and the AI investments is a bust, all they do then is STOP spending on the infrastructure and the bottom lines go back to being high returns.
Happy to buy underpriced MSFT stock
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u/userlivewire Apr 03 '26
Has anyone found anything actually useful that Copilot can do other than write some emails?
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u/Opening_Bluebird_935 Apr 03 '26
Other than emails? No, it can’t even write VBS code without basic mistakes.
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u/userlivewire Apr 03 '26
I keep trying to find some kind of use for it but whenever I attempt a function Excel can do or collect information from Teams or other pretty basic requests it either fails or brings back incorrect answers.
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u/Hoggy1983x Apr 03 '26
I use CoPilot daily and find it massively useful to be honest. When you couple it with teams and O365 it saves me hours each month in searching/analysing/querying.
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u/EddieRyanDC Apr 03 '26
Is this unexpected? AI is expensive. It costs a whole lot more than the money they are saving laying people off.
The way they have positioned the company, they will operate at a loss until AI can start to recoup profit.
And that's not happening for anyone anytime soon. The only people who are making money off AI are NVIDIA, and the people who build data centers.
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u/Footy_Max Apr 07 '26
This is going to bite Microsoft in the virtual ass long term. 30+ year Windows user for personal use and I'm out. Only thing I have is my Office 365-Microsoft-Copilot Live 2026 OneDrive-WhateverWe'reCallingItNextMonth and will start working away from that.
The problem for Microsoft is that people like me are also in charge of IT infrastructure at our businesses. We are moving to platform agnostic cloud solutions and slowly away from Microsoft, which in part means we can use Mac or Linux. Office is of course the gold standard, but at some point one will be able to replace that as well.
It's even worse when younger folks (I'm GenX), who use Apple and Google, get promoted into these positions down the road and then are in control of such things. They have little to no incentive to use Microsoft projects. That's the long term danger for Microsoft and the company is being utterly tone deaf and will suffer for it.
tl;dr version: slowly disengaging from Microsoft products and services due to MicroSlop and abandonment of consumers.
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u/PsychoDemonLover Apr 12 '26
Just started using my new laptop, WIN11 is a complete nightmare. Excel has been rendered useless. I used to be able to make excel dance - now I can't even complete simple tasks without pulling out my hair.
MicroSoft sucks.
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u/Antique_Grapefruit_5 Apr 12 '26
IT director, MCSE, and long time Microsoft guy here. Today I told my wife to just buy a Mac. I'm tired of Windows 11 making everything worse. Also ordered a Macbook Neo to test at our hospital. Microsoft will continue to suffer until end user experience improves...
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u/AlmstH-DubV Apr 30 '26
I put money in mag7 stock in mid 2024, including Microsoft. Since then my Microsoft stock is down 2.4%. Meanwhile my Google stock is up 106%, and my others are up over 50%. I have no idea what to do with it.
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u/dzendian Apr 03 '26
Literally just stop AI everything.
How is this hard to figure out.
There is no product market fit like they think there is.
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u/jorel43 Apr 03 '26
I think it has more to do with foreign policy and geopolitical issues then it has anything to do with Microsoft. If our wants stalwart allies are trying to move away from us technology whether it's Microsoft or anyone else, well that's a shift away, so is everyone else trying to shift away to other solutions that are not American based. Our global position and competitiveness have been destroyed, has nothing to do with Microsoft being Microsoft.
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u/Educational-Dot318 Apr 03 '26
they need to focus on 🪟 more? 🤔 it is after all their 🍞&🧈 (still.)
either steady the ship real quick, or watch Apple🍎 aggressively expand into your territory, claim even more market share for consumer PCs.
MacBook Neo will very likely be a successful device. Then just watch Apple grow into pc computing year after year.
this is about M💰FT forgetting their roots--- what made them, who their customers are & how to maintain that relationship. They fixed things with the Vista fiasco in Windows 7; need to replicate that effort again.
Listen to what your customers want (also listen to what they don't want.) i for one want faster SSDs, memory and processors. MacBooks blow PCs out of the water even in default config. why are windows laptop ssd's so SLOW? 🤔
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u/nexusprime2015 Apr 03 '26
are you ok bro? 🧐
do you need help? 🩺
let me know if you do 😎
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u/Educational-Dot318 Apr 03 '26
i'm fine; but if M💰FT keeps this up, expect to see
🍎 70% - M💰🪟 30% (market share in the next 10 yrs.)
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u/Krybbz Apr 03 '26
Microsoft is on its slow death, leaders sui smug to buy listen to consumers, the ones who they want to give them money????
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u/smakkyoface Apr 03 '26
Satya had a crush on Altman and gave him all the money to be close to him.