--- title: "AI Is Killing Microsoft" description: "OpenAI made headlines this year after [announcing]() it was giving up on what one exec categorized as distracting \"side quests,\" [including its Sora text-to-video app](), to double down on enterprise and coding, which are lucrative revenue drivers that could stop…" date: "2026-04-04" modified: "2026-04-04" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/artificial-intelligence/ai-killing-microsoft" categories: - "Anthropic" - "Artificial Intelligence" - "Ethics" - "OpenAI" --- # AI Is Killing Microsoft ![Microsoft's AI assistant, Copilot, is struggling to show traction, causing the tech giant to continue falling behind. Investors are not happy.]() *Sven Hoppe/picture alliance via Getty Images* OpenAI made headlines this year after [announcing]() it was giving up on what one exec categorized as distracting "side quests," [including its Sora text-to-video app](), to double down on enterprise and coding, which are lucrative revenue drivers that could stop the company from hemorrhaging billions of dollars a quarter. Many saw the moves as an effort to catch up with competitor Anthropic, whose Claude Code and Claude Cowork have made major headway this year. Meanwhile, Microsoft's AI assistant Copilot is struggling to gain traction, causing the tech giant to fall strikingly behind in the AI race. As [*CNBC* reports](), the company just closed out its worst quarter stock performance since the 2008 financial crisis, with shares sliding over 20 percent so far this year. While shares have rebounded somewhat over the last week, its slumping shares have wiped out all gains since roughly the same time last year. It's a terrible look. Microsoft has made massive investments in data centers and building out its Azure cloud AI infrastructure, but is struggling to efficiently scale up its Copilot assistant without sending expenses soaring. Then there's the major backlash to its Windows team stuffing the operating system with AI features nobody asked for, [garnering it the pejorative nickname]() of "Microslop." "Redmond is in a pickle," Melius Research analyst Ben Reitzes wrote in a note last week, referring to the Washington state city where Microsoft is headquartered. The tech giant has been swept up in a much broader market phenomenon dubbed the "SaaSpcalypse" this year, with software-as-a-service companies getting hammered by ongoing sell-offs. Panicked investors are afraid AI coding tools could make their often costly services redundant by allowing firms to develop their own in-house tools from scratch instead. "Much of traditional SaaS is dying/in likely terminal decay," investor Jason Lemkin [tweeted]() amid the panic. Despite its horrible stock market performance, Microsoft is still minting plenty of cash, with [reported revenues growing almost 17 percent]() in the first quarter of this year, compared to the same period last year. Yet some analysts remain bearish on the company's performance, particularly when it comes to increasingly steep competition in the AI space. "There is concern that the Microsoft 365 Copilot business has not lived up to quite their expectations, and that’s an area that could see new competitors," Harding Loevner analyst Kyle Levins told *CNBC*. Microsoft finds itself in a difficult situation. While its Azure cloud business remains a hot commodity among AI companies, including OpenAI and Anthropic, it's struggling to gain much traction with its own AI tools. Its ambitions remain as grand as ever, though. As [*Bloomberg* reported]() on Thursday, the company is pushing the development of its own in-house AI models, which could be ready by next year. "We must deliver the absolute frontier," Microsoft's AI chief Mustafa Suleyman told the broadcaster. "Certainly by 2027, the objective is to really get to state-of-the-art." But given waning enthusiasm and growing "[apathy]()" for the tech giant on Wall Street, the company may struggle to convince investors of its long-term vision. **More on Microsoft:** [*Microsoft CEO Concerned AI Will Destroy the Entire Company*]() ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()