Microsoft (MSFT) says more of its customers are signing up for and using its generative AI-powered Copilot software, a sign that its investments in AI are starting to pay off.
The tech giant is investing billions of dollars in its AI efforts as it seeks to spread the technology across its Azure-based cloud offerings, productivity product suite and Windows operating system.
And according to Jared Spataro, Microsoft’s corporate vice president of AI in the workplace, the company is seeing significant gains in using its Copilot for Microsoft 365.
“In the last quarter, Copilot’s customer base for (Microsoft 365) grew by over 60%, which is great because we were already well on our way in that space,” Spataro told Yahoo Finance.
“The number of daily users has more than doubled, and we like that trend. When we start to see that kind of usage intensity doubling, it means we’re really on the right track,” Spataro added.
In its latest earnings report, Microsoft reported revenue of $28.5 billion for its Intelligent Cloud segment, which includes its Azure services. That was slightly below the $28.7 billion Wall Street had expected. And while that was a 19% increase in revenue from a year earlier, investors reacted negatively to the news, sending shares down after the results were announced.
While Microsoft’s stock price has rebounded, it is still up about 1.5% over the past six months, compared to rival Google (GOOG, GOOGL), which is up more than 20%.
Microsoft’s failure shows how fine the line is between hyperscalers and software vendors between investing in AI and demonstrating that those investments are profitable.
Spataro said the number of 1,000-seat subscriptions for Copilot for Microsoft 365 has doubled at major companies such as Capital Group, Disney, Dow and Novartis. Microsoft did not provide specific information on the number of daily or monthly active users or the number of Copilot for Microsoft 365 licenses sold, however.
The key to Copilot’s success is proving that it saves business users time on certain tasks, whether that’s reducing the length of meetings, reducing the time it takes to sort through emails, or helping to brainstorm ideas.
So far, Microsoft says its customers are seeing results. Employees at Lumen, a networking and cybersecurity company, are saving four hours of work a week using Copilot, which should translate into annual savings of $50 million. Cognizant, for its part, says it has seen a 10% reduction in time spent writing emails and a 27% increase in the number of employees who end meetings early, Spataro said.
But it’s not all rosy for Microsoft. In February, the Wall Street Journal reported on user reactions to Copilot, with some complaining that the software tends to make mistakes when scheduling or summarizing meetings.
According to a Morgan Stanley research note seen by Business Insider, a pharmaceutical company executive who used Copilot canceled an upgrade he had ordered for the software, saying the price didn’t match the value he was getting from it.
Spataro, however, says that Microsoft conducted its own six-month study of 60 companies and found that they saw a 50 percent reduction in email usage thanks to Copilot. Microsoft also says it conducted a survey of 1,300 Copilot users and found that it typically takes companies 11 weeks and needs to save at least 11 minutes per day to make their Copilot habits stick over the long term.
“We’re rethinking how work gets done,” Spataro said. “This isn’t just an incremental change.”
In a separate Morgan Stanley research note, analysts found that 94% of CIOs surveyed said they plan to use Microsoft’s generative AI services in the next 12 months, up from just 47% in the second quarter of 2023.
Microsoft isn’t alone in its push to offer generative AI-powered software to its business customers. Google is also offering Gemini for Workspace to its customers, while Salesforce is also promoting its own generative AI software.
Microsoft is also rolling out Copilot-based updates to its Windows operating system, including its Recall feature, which was initially pulled from the market due to security concerns.
Microsoft will need to continue to grow its Copilot user base to gain market share and maintain its leadership position in enterprise software. That said, the generative AI revolution is still in its early stages, and Microsoft’s rivals are circling it.
And with investors paying close attention to Microsoft’s AI initiatives, the company will need to consistently deliver on its AI goals if it wants to succeed in this new era of computing.
Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.
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