Microsoft Cuts AI Targets: Is Copilot at Risk?

Microsoft has reportedly slashed its sales targets for its artificial intelligence products, specifically the Copilot software suite, following a period of sluggish adoption among enterprise customers.

Reports surfacing in December 2025 indicate that the tech giant has reduced sales quotas for some of its AI divisions by as much as 50 per cent.

This decision comes after internal data revealed that a significant number of sales staff were struggling to meet their initial goals, with some units seeing fewer than 20 per cent of salespeople hitting their targets.

Enterprise Customers Hesitant to Commit

The core of the issue appears to be a disconnect between the hype surrounding generative AI and its practical, daily utility in a corporate environment.

While Microsoft has integrated Copilot into its ubiquitous Office 365 ecosystem, businesses are reportedly hesitant to move beyond initial testing phases. Industry analysts have noted that many companies are stuck in 'pilot purgatory,' where they run small trials but decline to roll out the expensive software—often costing around £23 ($30) per user per month—to their entire workforce.

Comparisons to Past Failures

Compounding the problem is the criticism from industry rivals and dissatisfied users. Salesforce CEO Marc Benioff has been particularly vocal, recently comparing Microsoft Copilot to 'Clippy 2.0,' a reference to Microsoft's ill-fated office assistant from the late 1990s.

Critics argue that for many employees, the AI assistant does not provide accurate enough results to justify the high price tag. Furthermore, reports suggest that even some of Microsoft's own employees prefer using competitors' tools, such as OpenAI's ChatGPT, for certain tasks due to perceived differences in quality and ease of use.

Competition Intensifies in the AI Market

Microsoft is also facing stiff competition from other tech giants. Google's Gemini has been gaining ground, with recent market data suggesting it is closing the gap with Copilot in terms of user preference and market share.

Unlike Microsoft, which relies heavily on technology licensed from OpenAI, competitors like Google are developing their own end-to-end models, which some argue offers a more seamless integration for users already within those ecosystems. The struggle to maintain dominance is evident as Microsoft's stock performance has reportedly lagged behind some of its AI-focused peers throughout 2025.

High Abandonment Rates for AI Projects

The challenge Microsoft faces is reflective of a broader trend in the tech sector. Research from Gartner released earlier in the year predicted that at least 30 per cent of generative AI projects would be abandoned after the proof-of-concept stage by the end of 2025. The primary reasons cited include poor data quality, inadequate risk controls, and unclear business value.

For Microsoft, this means that while many companies are willing to test Copilot, fewer are seeing the immediate return on investment necessary to commit to long-term, large-scale contracts.

Microsoft's Long-Term Strategy Remains Firm

Despite these headwinds, Microsoft continues to invest heavily in its AI infrastructure. The company's annual report highlights record capital expenditure, with billions of pounds poured into data centres and chip procurement to support future AI demand.

Microsoft executives maintain that the technology is still in its early stages and that adoption will grow as the tools become more sophisticated and deeply embedded in business workflows. However, the decision to recalibrate sales targets suggests a recognition that the 'AI revolution' may take longer to materialise on the balance sheet than initially predicted.