Microsoft
Microsoft Corporation is an American multinational technology company founded by [[Bill Gates]] and Paul Allen on April 4, 1975.[^c1] Over five decades, the company evolved from a developer of personal computer software into one of the world's most valuable technology enterprises. Microsoft established the [[Windows]] operating system and Office productivity suite as industry standards, expanded into gaming with [[Xbox]], and transformed its business model under CEO [[Satya Nadella]] from a software-licensing model to cloud-based subscriptions anchored by [[Azure]].[^c2]
In its fiscal third quarter ended March 31, 2026, Microsoft reported revenue of $82.9 billion, up 18 percent year-over-year, with Microsoft Cloud revenue of $54.5 billion and Azure growing 40 percent.[^c3][^c40] The company's AI business reached a $37 billion annual revenue run rate, up 123 percent year-over-year.[^c13] Nearly 90 percent of the Fortune 500 were running agents built via Copilot Studio, and over 300 customers were on track to process more than one trillion tokens on Microsoft Foundry for the fiscal year.[^c24] Wells Fargo raised Microsoft's price target to $650 in June 2026, citing the company's homegrown AI push and capacity investments.[^c14] Microsoft projected roughly $190 billion in capital expenditures for calendar year 2026, reflecting its aggressive AI infrastructure buildout.[^c51]
At Build 2026 in June, Microsoft launched seven in-house MAI models, introduced the [[N1X chip|Nvidia RTX Spark]] partnership with new Surface hardware, unveiled the [[Majorana 2]] quantum processor with 20-second qubit coherence and a 2029 scalability target, and announced Project Solara for agent-first devices. The company launched [[Scout]], its first enterprise "Autopilot" agent built on [[OpenClaw]], and introduced [[Microsoft IQ]], a unified enterprise intelligence layer. Microsoft also announced that its multi-model agentic scanning harness ([[MDASH]]) would be folded into a full enterprise security control plane connecting Defender, GitHub Code Security, Agent 365, and Purview.[^c55] [[Microsoft 365 Copilot]] expanded with the general availability of [[Copilot Cowork]], a usage-based billing model for autonomous agentic tasks — the first change to Microsoft's Office pricing structure in two decades.[^c29][^c19] Windows 11 reached 1 billion active devices in January 2026, reaching the milestone roughly 130 days faster than Windows 10 did.[^c22][^c42]
In July 2026, Nadella articulated a "Frontier Diffusion & Control" strategy centered on expanding Microsoft's in-house MAI models across GitHub Copilot, Excel, Outlook, and other Microsoft 365 services.[^c49] The company also expanded its strategic partnership with Mistral AI in a multibillion-dollar deal, bringing Mistral Medium 3.5 and OCR 4 models to Microsoft Foundry and Copilot Studio for enterprise and regulated-industry customers.[^c48] Nadella pursued a dual strategy of deepening ties with AI partners while building independent capabilities. In addition to the $13 billion invested in OpenAI (now reduced from a 32.5 percent to a 27 percent stake after the April 2026 restructuring), Microsoft committed up to $5 billion to [[Anthropic]], which simultaneously committed $30 billion to Azure infrastructure.[^c41] By mid-2026, Microsoft was in advanced talks to supply Anthropic with [[Maia 200]] custom AI chips for inference, marking the first potential external customer for Microsoft's in-house silicon.[^c41] The restructured OpenAI partnership ended Azure's exclusive role as OpenAI's cloud provider but secured $250 billion in Azure consumption commitments through 2032.[^c33][^c5] The partnership generated roughly $30 billion in revenue between 2023 and 2025.[^c6]
Microsoft confirmed price increases for commercial Microsoft 365 suites effective July 1, 2026, with Business Basic rising from $6 to $7, Standard from $12.50 to $14, and E3 from $36 to $39 per user per month.[^c43] The company also launched [[Microsoft 365|Microsoft 365 E7]] at $99 per user per month, bundling E5 with Copilot and Agent 365.
In a major organizational restructuring in June 2026, Nadella dissolved Microsoft's traditional senior leadership team, replacing it with a five-member core group and a 35-strong engineering unit as the company prepared for the "agentic era" of superintelligence.[^c38] Yusuf Mehdi, a 35-year veteran, announced his planned departure, remaining through fiscal 2027 to oversee the "One Copilot" vision.[^c39] Nadella personally built a "Chain of Debate" AI agent prototype, reflecting his deepening hands-on involvement in product development. In July 2026, the company's security leadership was reshuffled under newly returned EVP Hayete Gallot, who replaced several senior executives and prioritized AI-powered security products including Security Copilot.[^c47]
Microsoft also secured a $9.69 billion contract to supply Windows, Microsoft 365, and on-premises Azure tools to U.S. defense and intelligence agencies through Dell as the central supplier.[^c10] In partnership with EY, Microsoft announced a joint $1 billion+ initiative to scale enterprise AI deployment.[^c11] KPMG committed to deploying Microsoft 365 Copilot across more than 276,000 professionals.[^c27] In March 2026, the company launched [[Copilot Health]], expanding its AI platform into consumer healthcare.[^c9] Microsoft announced plans for a Copilot super app combining chat, coding, and a new Autopilot function, to be released in summer 2026.[^c25] In July 2026, the company made Sales Agent and Service Agent generally available inside Microsoft 365 Copilot, Outlook, Teams, and Dynamics 365, extending agentic AI to sales and service workflows.[^c54] In July 2026, Microsoft launched Frontier Company, a $2.5 billion operating business embedding 6,000 AI engineering experts with enterprise customers.[^c44]
Microsoft built a substantial business selling AI models to Chinese companies despite US-China tensions, with ByteDance on track to spend over $1 billion annually on Microsoft AI and cloud services.[^c31] Executive vice president Jay Parikh stated that the company is undertaking "an entirely top to bottom systems overhaul" to support AI agents.
In July 2026, Microsoft conducted performance-based layoffs across multiple divisions including security, targeting employees not meeting expectations, with vacated roles often backfilled.[^c50] On July 6, 2026, Microsoft announced 4,800 job cuts representing approximately 2.1 percent of its global workforce, primarily affecting the commercial sales division and Xbox gaming business.[^c45] Within the Xbox division, 3,200 positions were eliminated and four studios were divested — Compulsion Games, Double Fine Productions, Ninja Theory, and Undead Labs — as CEO Asha Sharma described the division's margins as "three to 10 times lower than comparable platform and publishing businesses."[^c46] The gaming cuts were part of the most significant restructuring in Xbox history. The broader reduction brought total workforce cuts in 2026 to approximately 14,800 when combined with earlier voluntary buyouts and LinkedIn layoffs.
In July 2026, a securities class action lawsuit was filed against Microsoft alleging it made materially false and misleading statements about its Copilot AI products and Azure cloud platform between May 2025 and January 2026.[^c52]
The company faced significant regulatory headwinds in mid-2026. The European Commission proposed the Cloud and AI Development Act, which would impose strict sovereignty requirements on cloud services for strategic state tenders.[^c15] The Commission also issued preliminary findings that Azure should be designated as a gatekeeper under the Digital Markets Act, marking the first such designation for a cloud service.[^c34] EU competition chief Margrethe Vestager opened a fresh antitrust investigation into the Microsoft-OpenAI partnership's exclusivity clauses.[^c16] In the United Kingdom, the Competition and Markets Authority launched a Strategic Market Status investigation into Microsoft's enterprise software ecosystem in May 2026, with a final decision expected by February 2027.[^c17] In the United States, the Federal Trade Commission accelerated its antitrust probe into Microsoft's cloud, AI, and software bundling practices, issuing civil investigative demands to competitors.[^c35]
In February 2026, [[Asha Sharma]] was appointed Executive Vice President and CEO of Microsoft Gaming, succeeding Phil Spencer.[^c23] In April 2026, Sharma announced the rebranding of the gaming division from Microsoft Gaming back to Xbox.[^c36] In June 2026, Sharma and chief content officer Matt Booty published a "100-day reset" restructuring acknowledging that the Xbox division was operating at a 3 percent profit margin with over $20 billion in cumulative spending over five years. Microsoft was reported to be considering options for Xbox including a potential spinoff or restructuring as a wholly owned subsidiary.[^c26] Forza Horizon 6 sold nearly 5 million copies in its early-access week, generating over $325 million in revenue — the strongest early-access launch in the franchise's 14-year history.[^c37]
OpenAI, in which Microsoft holds a 27 percent stake, removed the word "safely" from its mission statement during its for-profit restructuring and replaced its 2018 charter with a new five-point principles document.[^c21]
The company also maintains a major presence in professional networking through [[LinkedIn]], in gaming through Xbox and its [[Activision Blizzard]] subsidiary, and in enterprise software through the Microsoft 365 suite. In May 2026, Microsoft and NVIDIA jointly teased a "new era of PC," confirming a partnership on the RTX Spark Arm-based processor for Windows PCs. In April 2026, the company offered its first-ever voluntary buyout program to approximately 8,500 senior US employees. The company faced mounting regulatory scrutiny across multiple jurisdictions, alongside investor concerns about its projected $190 billion capital expenditure on AI infrastructure for fiscal 2026. Its sustainability efforts have been complicated by rising energy demands from AI data centers, and in mid-2026 Microsoft signaled it may delay its clean energy targets.[^c7] The company also undertook significant workforce reductions in 2026, affecting approximately 10,000 employees through layoffs and voluntary buyouts.[^c8] Microsoft suffered a major DDoS attack against Azure infrastructure on June 18–19, 2026, that caused a near-ten-hour outage affecting Outlook, Xbox Live, and Minecraft; the company acknowledged that an error in its own defenses amplified the attack.[^c30]
In its security operations, Microsoft released the largest Patch Tuesday in its history in July 2026, addressing 569 CVEs — 56 rated critical and three zero-days, two of them exploited in the wild — a volume the company linked directly to AI-driven vulnerability discovery through MDASH.[^c53][^c55]