Victoria Bazir
⬤ Microsoft has slashed sales targets for its Copilot AI software by as much as 50% after struggling to find enterprise buyers. Internal testing earlier this year revealed AI agents failed to complete tasks up to 70% of the time, raising serious questions about the technology's reliability for real-world business applications.
⬤ Market share data shows Microsoft's Copilot is losing ground to competitors. ChatGPT commands roughly 61% of the AI assistant market, while Google's Gemini holds 13% and grew 12% in the latest quarter. Copilot sits at just 14% market share—well behind the leader and increasingly threatened by Gemini's momentum. Microsoft's early move into generative AI hasn't translated into market dominance.
⬤ There's a clear gap between what Microsoft says publicly and what's happening internally. While the company insists overall sales quotas remain unchanged, individual targets were quietly cut by significant margins. This comes as Microsoft pours massive capital into AI infrastructure, with record spending across Windows, Office, and Azure—investments that haven't yet driven the customer adoption levels expected for Copilot subscriptions.
⬤ This matters because AI is the cornerstone of Microsoft's growth strategy and competitive edge in enterprise software. Weak Copilot adoption could shift how investors view returns on AI spending and whether generative AI is ready to move from pilot projects to meaningful revenue. Performance gaps versus competitors may also impact broader sentiment around enterprise AI demand, pricing power, and the viability of massive tech sector AI investments.
Victoria Bazir
