Microsoft is doubling down on its artificial intelligence strategy after closing a record fiscal year, with Chairman and Chief Executive Officer Satya Nadella outlining the company's next phase of AI development and rapid Copilot expansion. The technology giant is building a flexible AI model system that allows different models to be substituted seamlessly while preparing to launch a unified Copilot "super app" later this quarter.
The update came as Microsoft reported annual revenue of $331 billion, up 18%, while Microsoft Cloud revenue rose 27% to $214 billion. Azure revenue crossed the $100 billion mark during the fiscal year, growing 41%, underscoring continued momentum in the company's cloud and AI businesses.
New AI Architecture To Improve Performance
Satya Nadella said the company is building a new AI model system in which the harness, context, memory, and action space are separated from any single model family.
According to Nadella, this approach helps move the frontier on the cost-to-outcome curve while also improving business continuity and resilience, as every model in the system can be substituted when needed.
He said Microsoft is already using the architecture across its own products and is making it available to customers through Foundry.
Also Read: Microsoft's Cloud Accelerates To Fastest Growth Since 2022
Copilot Usage Continues To Accelerate
Nadella said Microsoft is rapidly expanding Copilot beyond chat experiences to Cowork and Autopilots, while continuing to improve its performance.
He said user satisfaction scores have doubled over the last three quarters, while latency was reduced by 25% during the latest quarter.
The company also reported strong growth in Copilot adoption. The number of conversations per user nearly doubled from a year earlier, while average weekly engagement reached levels comparable with Outlook and Teams.
Microsoft said the number of customers with more than 50,000 Copilot seats increased sevenfold year over year. Meanwhile, customers deploying Copilot to a majority of their information workers rose nearly 75% compared with the previous quarter.
Looking ahead, Nadella said Microsoft plans to bring all of its Copilot experiences together into a single "super app" spanning both consumer and commercial users later this quarter.
He said the company sees an even bigger opportunity ahead as it continues to expand its AI platform and Copilot ecosystem.
Also Read: Microsoft Reports Over $130 Billion In New Data Center Leases
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