Microsoft CEO Satya Nadella defended the company’s ambitious AI strategy during the latest earnings call, highlighting strong growth in its Copilot AI products even as some investors voiced caution over rising costs and slower cloud performance.
For the quarter ending December 2025, Microsoft reported revenue of $81.3 billion and a 21 % increase in net income, driven primarily by cloud sales. Despite these strong results, Microsoft shares fell, as Wall Street focused on the company’s massive capital expenditures for AI infrastructure and data centres, alongside slightly softer growth in Azure and Microsoft 365 revenues than expected.
Nadella emphasised that demand for AI far exceeds current capacity, framing heavy spending as an investment in future growth. He reported that daily usage of Copilot AI products has nearly tripled year-over-year. Microsoft 365 Copilot now boasts 15 million paid seats, while GitHub Copilot has 4.7 million paid subscribers, reflecting strong adoption across both corporate and developer environments.
Beyond office productivity tools, Nadella highlighted specialised AI applications, such as Dragon Copilot for healthcare, which has been used in millions of patient encounters. This demonstrates Microsoft’s strategy to expand AI adoption across multiple sectors, not just within its core software suite.
Despite these positive usage trends, some investors remain cautious. Analysts note that while AI adoption is strong, Azure’s growth pace has slowed slightly, and the cost of building AI infrastructure may pressure margins if adoption growth does not keep pace.