January 29, 2026
BlogMicrosoft Claims 15 Million Paid M365 Copilot Seats
Microsoft has released for the first time an AI adoption number about which many had been curious. During its Q2 FY26 earnings call on January 28, officials said the company now has 15 million paid seats of Microsoft 365 Copilot among its 450 million Microsoft 365 commercial subscribers.
This 15 million figure does not include consumer Copilot subscriptions. Nor does it include the Microsoft M365 and Office 365 subscribers using Copilot Chat who do not have an additional paid M365 Copilot subscription; Microsoft says there are “multiples more” of those enterprise Chat users. In other words, only 3.33 percent of M365/O365 commercial customers have bought Microsoft 365 Copilot licenses for $30 per user per month — or less, based on recent discounting of the service.
Microsoft 365 Copilot has been generally available to commercial customers since Nov. 2023. Even though M365 Copilot is powered by OpenAI’s GPT technology, Microsoft has begun including Anthropic’s Claude models in M365 Copilot to give users more choice and reduce its dependency on OpenAI. It also has added a couple of Microsoft-developed agents, the Researcher and Analyst agents, to M365 Copilot for no additional charge to try to sweeten the value proposition. By integrating Copilot Chat into M365 and O365 subscriptions for no additional charge, Microsoft has tried to show Office users the value of the tool. But it seems even a built-in freebie hasn’t resulted in a guaranteed mass upgrades to the paid Microsoft 365 Copilot.
“For comparison, OpenAI claimed roughly 35 million paying users (albeit laregly consumers, not enterprises) as of last summer, and they don’t have anything other than the core product to draw them in,” said Directions on Microsoft analyst Greg DeMichillie. “My conclusion is that Office isn’t much of an advantage, at least in terms of getting people to shell out money for AI. Of course, you could argue they just haven’t done a good job integrating into Office yet.”
Microsoft has a history of relying on suites and bundles to power it through until it eventually “wins,” noted Directions‘ analyst Jim Gaynor. But “the old cash cows may no longer have the juice to cover the massive costs of AI,” Gaynor added.
“Microsoft is struggling mightily to be a leading-edge player here and not to become the ‘utility service provider’ of infrastructure (Azure). After all, there’s no hockey-stick growth in that. But the very things that have carried them in the past may be a disadvantage now,” Gaynor said.
About That $625 Billion Backlog…
Unsurprisingly, Microsoft officials don’t see things that way.
“Even in these early innings, we have built an AI business that is larger than some of our biggest franchises that took decades to build,” said Microsoft CEO Satya Nadella during the earnings call.
Revenue for the quarter was $81.3 billion; net income, $38.5 billion; and earnings per share $4.14, ahead of expectations. Azure and related services grew 39 percent in the second fiscal quarter, compared to 40 percent in Q1.
Microsoft is continuing to invest in supporting cloud and AI workloads at a breakneck pace. Officials said capital expenditures for the quarter were $37.5 billion, up 66 percent year-over year (and up from $34.9 billion in Q1 FY26). Roughly two-thirds of the $37.5 billion were primarily for GPUs and CPUs for Azure and AI solutions; the remainder was for “long-lived” assets like datacenter leases. Officials said that customer demand is still continuing to exceed supply, but are expecting capex spending to decrease next quarter.
Microsoft officials also acknowledged that its backlog of cloud orders more than doubled in Q2, to a whopping $625 billion. Of this total, 45 percent is attributable to OpenAI’s Azure commitments over multiple years, which worries some market watchers who have been cautious about OpenAI’s plans to become profitable.
Another new data point shared during the call: Microsoft says it now has 1 billion Windows 11 users, up 45 percent year-over-year. The end of support for Windows 10 in Oct. 2025 fueled this growth.
The New Microsoft Tech Stack
Nadella outlined the three layers of its new tech stack where Microsoft is expecting growth in the years to come. Remaking GitHub Copilot into a broader, agent-centric platform is a big part of the plan. The three layers:
- Cloud and token factory
- Agent platform
- Agentic experiences
Cloud and token factory is the layer where Microsoft is working to build out the underlying cloud infrastructure powering first- and third-party apps. The company is optimizing for “tokens per watt per dollar” using silicon, systems and software, Nadella said. He highlighted the Fairwater “AI superfactory” datacenters that Microsoft is building, as well as its own Maia 200 AI accelerator processor as areas of investment here.
Nadella said Microsoft’s view is “all software is being rewritten,” and “agents are the new apps.” Microsoft is positioning Microsoft Foundry and Copilot Studio as its hubs for customers building apps and agents. And the company is betting on its recently introduced IQ brands across Fabric, Foundry and Microsoft 365 to connect agents to systems of record and all kinds of data, he said. He claimed that Foundry is not just an AI driver, but a driver for other Azure developer, database and app services.
To further its agentic ambitions – and hopefully thwart those of its AI-coding competitors — Microsoft is working to turn GitHub Copilot into “an ecosystem of agents that collaborate across the entire development lifecycle from coding and code review to security, debugging, deployment, and maintenance.”
Microsoft has big ambitions in the AI space, but its approach requires customers to change the way they work and to build agents/apps from scratch. The big questions: Will customers buy in? To what extent, and when?
