Several Microsoft divisions have reduced sales growth targets for some AI products after many sales teams missed their goals for the fiscal year that ended in June. The Information reported the change on Wednesday, noting that it is unusual for Microsoft to lower quotas for specific products. Two Azure sales staff told the outlet that teams struggled to meet earlier expectations.
The update hit investor sentiment. Microsoft shares fell more than 2% in premarket trading. The stock is still up about 16% this year, helped by strong demand for AI tools built with OpenAI’s technology.
The shift also comes as concerns grow about the real pace of AI adoption. An MIT study earlier this year found that only about 5% of AI projects move beyond the pilot phase. Because of that, analysts say companies may be spending far ahead of what the market can absorb.
Microsoft is under pressure to show returns on its massive AI investments. In October, the company reported record capital spending of nearly $35 billion in its first fiscal quarter. It also warned that its spending will keep rising as it tries to grow capacity. U.S. tech giants together are expected to spend about $400 billion on AI this year.
The company has said supply constraints continue to limit growth. It predicts that shortages in AI capacity will last until at least June 2026, even as new data centers and hardware come online.
