Microsoft slashes AI sales targets as enterprises resist paying premium for unproven agents

Microsoft slashes AI sales growth targets as customers resist unproven agents

Microsoft has lowered sales growth targets for its AI agent products after many salespeople missed their quotas in the fiscal year ending in June, according to a report Wednesday from The Information. The adjustment is reportedly unusual for Microsoft, and it comes after the company missed a number of ambitious sales goals for its AI offerings. AI agents are specialized implementations of AI language models designed to perform multistep tasks autonomously rather than simply responding to single prompts. So-called "agentic" features have been central to Microsoft's 2025 sales pitch: At its Build conference in May, the company declared that it has entered "the era of AI agents." The company has promised customers that agents could automate complex tasks, such as generating dashboards from sales data or writing customer reports. At its Ignite conference in November, Microsoft announced new features like Word, Excel, and PowerPoint agents in Microsoft 365 Copilot, along with tools for building and deploying agents through Azure AI Foundry and Copilot Studio. But as the year draws to a close, that promise has proven harder to deliver than the company expected. According to The Information, one US Azure sales unit set quotas for salespeople to increase customer spending on a product called Foundry, which helps customers develop AI applications, by 50 percent. Less than a fifth of salespeople in that unit met their Foundry sales growth targets. In July, Microsoft lowered those targets to roughly 25 percent growth for the current fiscal year. In another US Azure unit, most salespeople failed to meet an earlier quota to double Foundry sales, and Microsoft cut their quotas to 50 percent for the current fiscal year. The sales figures suggest enterprises aren't yet willing to pay premium prices for these AI agent tools. And Microsoft's Copilot itself has faced a brand preference challenge: Earlier this year, Bloomberg reported that Microsoft salespeople were having trouble selling Copilot to enterprises because many employees prefer ChatGPT instead. The drugmaker Amgen reportedly bought Copilot software for 20,000 staffers only for them to ignore it in favor of OpenAI's chatbot. A Microsoft spokesperson declined to comment on the changes in sales quotas when asked by The Information. But behind these withering sales figures may lie a deeper, more fundamental issue: AI agent technology likely isn't ready for the kind of high-stakes autonomous business work Microsoft is promising. The gap between promise and reality The concepts behind agentic AI systems emerged shortly after the release of OpenAI's GPT-4 in 2023. They typically involve spinning off "worker tasks" to AI models running in parallel with a supervising AI model, and incorporate techniques to evaluate and act on their own results. Over the past few years, companies like Anthropic, Google, and OpenAI have refined those early approaches into far more useful products for tasks like software development, but they are still prone to errors. At the heart of the problem is the tendency for AI language models to confabulate, which means they may confidently generate a false output that is stated as being factual. While confabulation issues have reduced over time with more recent AI models, as we've seen through recent studies, the simulated reasoning techniques behind the current slate of agentic AI assistants on the market can still make catastrophic mistakes and run with them, making them unreliable for the kinds of hands-off autonomous work companies like Microsoft are promising. While looping agentic systems are better at catching their own mistakes than running a single AI model alone, they still inherit the fundamental pattern-matching limitations of the underlying AI models, particularly when facing novel problems outside their training distribution. So if an agent isn't properly trained to perform a task or encounters a unique scenario, it could easily draw the wrong inference and make costly mistakes for a business. The "brittleness" of current AI agents is why the concept of artificial general intelligence, or AGI, is so appealing to those in the AI industry. In AI, "general intelligence" typically implies an AI model that can learn or perform novel tasks without having to specifically be shown thousands or millions of examples of it beforehand. Although AGI is a nebulous term that is difficult to define in practice, if such a general AI system were ever developed, it would hypothetically make for a far more competent agentic worker than what AI companies offer today. Despite these struggles, Microsoft continues to spend heavily on AI infrastructure. The company reported capital expenditures of $34.9 billion for its fiscal first quarter ending in October, a record, and warned that spending would rise further. The Information notes that much of Microsoft's AI revenue comes from AI companies themselves renting cloud infrastructure rather than from traditional enterprises adopting AI tools for their own operations. For now, as all eyes focus on a potential bubble in the AI market, Microsoft seems to be building infrastructure for a revolution that many enterprises haven't yet signed up for.

Microsoft stock sinks on report AI product sales are missing growth goals

Microsoft Chairman and Chief Executive Officer Satya Nadella (L) returns to the stage after a pre-recorded interview during the Microsoft Build conference opening keynote in Seattle, Washington on May 19, 2025. Microsoft stock sank more than 2% on Wednesday following a report that the company has lowered quotas for artificial intelligence software sales after many of its salespeople missed growth goals in the last fiscal year. Such a move is rare for Microsoft, according to The Information, which cited two salespeople in Azure's cloud unit. The sales lag occurred for Microsoft's Foundry product, an Azure enterprise platform where companies can build and manage AI agents, the news site said. AI agents can carry out a series of actions for a user or organization autonomously.

Microsoft denies reports of lower AI sales targets as customers resist new tools

Microsoft has reportedly reduced its sales targets for some AI products after struggling to hit them, according to The Information. The company's Azure AI agent-building platform was highlighted as a key product that has been underperforming in terms of sales. However, Microsoft has denied lower sales quotas, noting that The Information confused growth targets with sales quotas. "The Information's story inaccurately combines the concepts of growth and sales quotas, which shows their lack of understanding of the way a sales organization works and is compensated," a company spokesperson commented. "Aggregate sales quotas for AI products have not been lowered," they stressed. The Information reported that fewer than one in five workers from one of the US Azure sales units met the previous growth target of 50% for Foundry. Another sales unit reportedly had a quota to double Foundry sales, but this is believed to have been lowered to 50%. Although Redmond denied lowering sales quotas, the company did not deny reducing growth targets, per se. TechRadar Pro asked Microsoft for clarification, but we have not received a response as yet. With this in mind, it's possible that Microsoft, and many other companies, could be struggling to shift some AI products as the world works out where AI is most useful. Azure revenue rose 40% last quarter, reflecting strong demand for cloud-based technologies including AI. CEO Satya Nadella said the company will "continue to increase [its] investments in AI across both capital and talent to meet the massive opportunity ahead." Microsoft stock dropped around 3% following the initial report, but it has since started to recover.

Microsoft dip creates latest excuse for investors to doubt AI trade

A report that Microsoft lowered its ambitious growth targets was enough to take billions of dollars out of the tech sector on Monday before the company denied the report. Why it matters: The knee-jerk selloff is indicative of how quick the market is to react to doubts over the AI trade right now. The big picture: Microsoft is one of the main players in AI, and any hint that demand for the technology may be ebbing feeds into a broader nervousness about a bubble. Those jitters have been seen in the shares of other AI players this fall. * Meta, which teased increased spending and issued debt after its latest earnings, caused some investors to doubt its AI capital spending plans. * Oracle has taken on the highest amount of debt among large hyperscalers. * Nvidia, which delivered remarkably robust earnings results for the third quarter, was still not enough to put concerns about an AI bubble to rest. What they're saying: When it comes to the AI trade, "it's a lot of fun to figure out why this might fail," Daniel Newman, CEO and technology analyst at the Futurum Group, a research and advisory firm, tells Axios. * Artificial intelligence is not being deployed and adopted "as quickly in some cases" as investors might want, he says. "This stuff is hard." Zoom in: The Information reported Wednesday that Microsoft reduced sales growth targets for certain AI software offerings. Zoom out: "Aggregate sales quotas for AI products have not been lowered, as we informed them prior to publication," a Microsoft spokesperson tells Axios. 💭 Thought bubble: At a recent Axios event with over a dozen of my sources, everyone at the table agreed that clients are as worried about their children being able to get jobs amid the AI expansion as they are about a bubble.

Microsoft's Attempts to Sell AI Agents Are Turning Into a Disaster

For many months now, AI companies have made a huge deal out of "AI agents," meaning autonomous software systems that can make decisions and take actions on behalf of humans with minimal intervention. But when that ambitious vision will turn into a reality remains anybody's guess. The current crop of agentic AI models is still getting easily tripped up, often requiring humans to jump in, effectively undercutting their purpose. The numbers remain dismal. Researchers at Carnegie Mellon University found earlier this year that even the best-performing AI agent, which was Google's Gemini 2.5 Pro at the time, failed to complete real-world office tasks 70 percent of the time. And this summer, OpenAI released its ChatGPT agent, promising that it can "do work for you using its own computer, handling complex tasks from start to finish." But in reality, users found the experience lackluster, calling it "not very useful," "shaky," and "slow." As such, it shouldn't come as much of a surprise that Microsoft is struggling to sell its enterprise clients on its own take on agentic AI. As The Information reports, the company's Azure salespeople are seriously struggling to meet some extremely ambitious sales growth targets, cutting quotas by up to 50 percent earlier this year. Microsoft's stock sank over 2.5 percent on Wednesday, showing that investors are unimpressed by the tepid sales results. Meanwhile, the tech giant went into damage control mode, with a spokesperson telling Bloomberg in a statement that "The Information's story inaccurately combines the concepts of growth and sales quotas" and that "aggregate sales quotas for AI products have not been lowered." Regardless, the dustup suggests that enterprise customers are far from convinced that large AI agents are ready to autonomously complete complex multistep tasks. It's yet another indication that companies are struggling to convert the enormous hype surrounding generative AI into actual revenue, a concerning trend considering the billions of dollars AI companies are burning through right now with no end -- or return on investment -- in sight. It's not like Microsoft's clients are being unreasonable. Generative AI continues to struggle with the absolute basics, and hallucinations remain a major pain point. Multiply the potential for an AI to make up facts as it attempts to complete a more nuanced, multistep project, and the chances of it tripping up rise even further. In short, the future that's being sold to these customers simply hasn't materialized. And that could hamper AI companies' sky-high expectations when it comes to monetizing the tech. Then there's competition ratcheting up the pressure for Microsoft. In June, Bloomberg reported that workers preferred to use OpenAI, which was cutting into its ability to sell its Copilot. Fortunately for Microsoft, most of its current revenues come from renting out cloud computing infrastructure to AI companies, not selling AI products to enterprise customers, as The Information notes. Nonetheless, the cracks are starting to show, indicating sales could continue to lag behind goals as customers realize they might be being sold a vision of a distant future.

Microsoft lowers AI software sales quota as customers resist new products, The Information reports

Multiple divisions at Microsoft have lowered sales growth targets for certain artificial intelligence products after many sales staff missed goals in the fiscal year that ended in June, The Information reported on Wednesday. It is rare for Microsoft to lower quotas for specific products, the report said, citing two salespeople in the Azure cloud unit. Shares of the company, which is one of the biggest winners of the generative AI boom thanks to its early bet on ChatGPT-maker OpenAI, fell more than 2% in premarket trading. The stock has gained about 16% this year. The Windows maker did not immediately respond to a Reuters request for comment. Lower sales growth goals for Microsoft's AI products are likely to fans fears about real-world adoption of AI as an MIT study from earlier this year had found that only about 5% of AI projects advance beyond the pilot stage. US tech giants are under investor pressure to prove that their hefty investments in AI infrastructure are generating returns. Microsoft reported a record capital expenditure of nearly $35 billion for its fiscal first quarter in October and warned that spending would rise this year. Overall, U.S. tech giants are expected to spend around $400 billion on AI this year. The companies have said the outlay is necessary to overcome supply constraints that have hobbled their ability to capitalize on AI demand. Microsoft has predicted that it would remain short on AI capacity at least until the end of its current fiscal year in June 2026.

Microsoft Stock Slips as "Hesitant" Clients Reportedly Force Cuts to AI Sales Goals - Microsoft (NASDAQ:MSFT)

Microsoft Corp (NASDAQ:MSFT) shares are slipping following reports that the tech giant has lowered its sales targets for artificial intelligence software, as clients are hesitant to buy the new tools. Azure salespeople described the move as rare, noting that the company seldom lowers quotas for specific products, Reuters cited the Information. Benzinga reached out to Microsoft investor relations for their take on the report and is awaiting their response. Also Read: Microsoft Builds Massive AI 'Super Factory' In Atlanta To Power OpenAI And Elon Musk's xAI This development highlights the tension between massive spending and actual usage. Recently, Microsoft CEO Satya Nadella dismissed the idea of fully autonomous AI companies as "far-fetched," arguing that humans must remain central to operations to build and maintain critical systems. He envisioned a future defined by "macro delegation," where workers assign broad tasks to AI agents and manage them through a new type of inbox. While he agrees productivity will skyrocket, Nadella insisted that human agency will continue to steer the technology. Nadella also warned that the AI industry is straining the electric grid and must earn its "social permission" to consume energy by proving it generates broad economic value rather than just enriching a few tech giants. He argued that the sector risks heading down a "road to nowhere" if returns remain concentrated, though he remains confident in the technology's long-term trajectory. The $3.6 trillion tech giant gained over 13% year-to-date trailing the NASDAQ Composite Index's 21% returns. Microsoft beat Wall Street expectations for the first quarter, posting $77.7 billion in revenue -- an 18% increase -- and earnings of $4.13 per share. Azure revenue jumped 40% and total cloud revenue reached $49.1 billion. CEO Satya Nadella highlighted that aggressive investments in AI and cloud infrastructure are fueling this growth. Despite the strong performance, the stock fell 3% in after-hours trading as investors awaited specific forward-looking guidance from the conference call. It spent nearly $35 billion on capital expenditures last quarter alone. Microsoft expects second quarter revenue of $79.50 billion-$80.60 billion compared to the analyst consensus of $80.27 billion. MSFT Price Action: MSFT stock traded 2.66% lower to $477.22 at last check on Wednesday. Read Next: Microsoft Gears Up For Bigger AI Push With Rising Capex And Cloud Confidence Image: Shutterstock MSFTMicrosoft Corp$481.05-1.83%OverviewMarket News and Data brought to you by Benzinga APIs

Why Microsoft Fell Today, But Then Recovered | The Motley Fool

This morning, tech news outlet The Information published a story that may have sent fears down the spines of Microsoft investors, and really all investors bullish on the prospects of generative AI. However, Microsoft later denied the story, which led to the modest recovery. Still, a larger issue remains with Microsoft and its AI offerings. This morning, The Information reported that Microsoft was cutting quotas across its salesforce regarding generative AI sales. The implication is that Microsoft's AI-related add-on sales weren't as significant as expected, so the tech giant is cutting its sales force quotas to something more achievable -- sort of like a teacher lowering the threshold for an "A" when grading a tough exam on a curve. In the story, The Information highlighted one specific example of a project at the Carlyle Group (CG +2.70%), which proved more difficult than expected in pulling data from the company's other applications. However, later in the day, Microsoft officially denied the story, telling CNBC: The Information's story inaccurately combines the concepts of growth and sales quotas, which shows their lack of understanding of the way a sales organization works and is compensated... Aggregate sales quotas for AI products have not been lowered, as we informed them prior to publication. It's difficult to know what to believe is the absolute truth in this case. On the one hand, it appears Microsoft has made some changes to its sales quotas at a more granular level, though overall "aggregate" quotas don't appear to have changed. While it appears The Information may be reading too much into this specific sale force quota issue, there may be other reasons for concern among Microsoft shareholders. After all, Microsoft's main AI effort centers around OpenAI, of which Microsoft owns 27%, along with access to OpenAI's IP. However, following the release of Alphabet's (GOOG +1.67%) (GOOGL +1.57%) Gemini 3 model on November 18, OpenAI CEO Sam Altman issued a "code red" alert to his staff, indicating Alphabet had closed the gap, or perhaps even taken the lead, over the latest OpenAI model. The Gemini release has caused a real near-term shift in the balance of power among the AI races. While Microsoft/OpenAI had the early lead, it appears Alphabet will be a strong competitor, to say the least. Therefore, while The Information's report may be making a mountain out of a molehill regarding the sales force quota issue, there are reasons for Microsoft shareholders to be wary in light of heightened competition. Nevertheless, investors shouldn't panic, especially with CEO Satya Nadella at the helm. After all, Alphabet had been doubted for the better part of two years, so Microsoft and OpenAI could also retake the AI lead at some point int he future. Investors should stay invested in both Microsoft and Alphabet to defray risk at this early stage of the AI era.

Microsoft stock falls after report of lowered AI sales quotas By Investing.com

Investing.com -- Microsoft (NASDAQ:MSFT) stock fell 2% Wednesday morning following a report from The Information that the tech giant has reduced sales quotas for its AI software products as customers show resistance to newer offerings. The report indicated that Microsoft has lowered expectations for how quickly it can monetize its newer AI products, known as "agents," which are designed to automate multi-step tasks. According to the publication, multiple Microsoft divisions have reduced sales growth targets for certain AI products after many salespeople missed their goals in the fiscal year that ended in June. This adjustment is reportedly unusual for Microsoft, suggesting the company is facing unexpected challenges in convincing customers to increase spending on AI technologies. The Information noted that the change reflects growing resistance from companies to pay premium prices for AI solutions. The news had broader market implications, sending ripples through the AI industry and tech sector. The Nasdaq 100 declined 0.6% in pre-market trading as investors reassessed the near-term growth potential of AI-related investments. Microsoft had previously positioned 2025 as a breakthrough year for AI capabilities that could automate complex tasks, such as generating dashboards from company sales data. However, the report suggests the adoption timeline may be longer than initially anticipated.

Microsoft trims its AI business ambitions, hindered by demand

Microsoft has lowered its AI-related sales targets, notably in its Azure cloud division, according to information reported on Wednesday by The Information. This revision follows weaker-than-expected results for the fiscal year ended June, with several teams missing quotas. Two salespeople interviewed noted that such a cut is unusual for the group, which is nonetheless viewed as a sector leader, thanks to its strategic alliance with OpenAI. This retreat comes in a context where enthusiasm for generative AI remains high, but its concrete adoption in companies is slow to become widespread. A MIT study indicates that only 5% of AI projects surpass the pilot stage. This customer caution could explain results that fall short of expectations. Microsoft shares fell 2% during the session, even though they are up about 16% since the start of the year.