On September 8, 2026, Labaton Keller Sucharow was appointed Lead Counsel in a securities class action against Microsoft Corporation (Microsoft or the Company) and certain of its executives (collectively, Defendants).

Microsoft is a multinational technology company whose principal growth driver in recent years has been Azure, the Company’s cloud-computing platform.  The case alleges that, during the Class Period from May 1, 2025 through January 28, 2026, Defendants touted the capabilities and widespread customer adoption of Microsoft’s flagship artificial intelligence (AI) assistant Copilot, as well as Microsoft’s ability to generate appropriate returns from its substantial AI investments.  In reality, Copilot allegedly suffered from significant technical, organizational, and user-experience problems, weak customer adoption, and declining market share.  The case further alleges that Microsoft was required to increase its capital expenditures and divert scarce computing capacity from its profitable Azure services to support Copilot and related AI research and development, constraining Azure’s growth.

Investors began to learn the truth on January 28, 2026, when Microsoft announced its fiscal second-quarter 2026 financial results after the close of trading.  Microsoft disclosed that Azure’s growth had fallen below analysts’ expectations because computing-capacity constraints had caused the Company to allocate resources to Copilot applications and AI-related research and development.  Microsoft also reported substantially increased capital expenditures and disclosed that it had secured only 15 million paid Microsoft 365 Copilot seats, a fraction of its more than 450 million commercial Microsoft 365 users.  On this news, Microsoft’s stock price declined approximately 10% the following trading day.

Subsequent reporting by The Wall Street Journal (the WSJ) further detailed Copilot’s adoption and functionality problems.  Among other things, a survey cited by the WSJ found that the percentage of Copilot subscribers who used the product as their primary option had fallen from 18.8% to 11.5%, while a Citi Research note cited by the WSJ reported that some companies were using only approximately 10% of their paid Copilot seats.  Current and former Microsoft employees also reportedly described brand-positioning and interoperability problems that had frustrated users and impeded Copilot’s adoption.

The case is In re Microsoft Corporation Securities Litigation, No. 26-cv-2071 (W.D. Wash.).  Labaton Keller Sucharow represents Lead Plaintiff National Pension Service.