Preview|MSFT FY1Q27: GPT-5.6 Improves Copilot User Experience, Deployment Is Much Faster Than for Competing Products, and More Customers Are Adding Seats at Scale; Azure Expected to Beat Guidance

After several quarters of limited visible progress in Copilot and Azure, we saw a clear shift last quarter. For the first time, we saw some of the world’s largest multinational companies purchasing tens of thousands of additional Copilot seats, suggesting that Copilot was finally moving beyond the trial stage toward company-wide deployment among large enterprise customers. This shift fueled our enthusiasm in last quarter’s MSFT preview and prompted us to change our view on Copilot for the first time in a year. We believe this trend has continued this quarter.

We interviewed ten experts to update our research on the following topics for this quarter:

1. M365 Copilot and E7 sales progress
2. Copilot product experience, usage, Cowork progress and competition
3. Copilot Studio progress
4. Azure AI Foundry and enterprise use of multiple models
5. GPU and CPU rental pricing, data center capacity, capital spending and traditional Azure services

I. M365 Copilot sales progress and outlook

We interviewed six sales partner experts familiar with M365 Copilot and two enterprise users. Our main findings are as follows: