Microsoft $MSFT ( ▼ 0.05% ) dropped about 3 percent this morning after a report from The Information claimed the company lowered sales quotas for its AI products because customers are not eager to pay extra for tech that still feels unproven. Shares recovered a bit after CNBC reported that Microsoft pushed back, saying it has not lowered quotas or targets. The Information later updated its headline to say Microsoft cut AI software growth targets as buyers resist newer tools.
The report also noted that a large chunk of Microsoft’s AI revenue comes from AI companies renting its cloud infrastructure. Critics have argued these circular arrangements make AI growth look stronger than it is. The stock has struggled since Microsoft’s late October earnings, when management reversed its guidance on capital spending, signaling that AI-related expenses will keep climbing.
Bloomberg also reported earlier this year that Microsoft sales teams were having a hard time selling Copilot because many customers prefer using OpenAI’s ChatGPT instead.