MSFT FY3Q25: Modestly Better Than Fear - Signs Of Stabilization

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We conducted a MSFT Preview last quarter and published a detailed analysis of M365 Copilot's sales progress and product challenges.

In this quarter's Preview, we're shifting toward cautious optimism. This is primarily because expectations for Microsoft are now more modest, while M365 Copilot and Microsoft's new product Copilot Studio appear to be selling well. We also observe Microsoft accelerating GPU rental revenue after loosening its tight binding with OpenAI - what AWS can do, Azure should be able to do as well.

These factors suggest Microsoft has a "Better than Fear" opportunity.

In this report, you'll find Copilot's sales progress and product changes, Copilot Studio's sales momentum, OpenAI API sales and use case evolution, GPU rental trends, TikTok's impact on Microsoft, and our model updates.

We interviewed 2 Copilot channel specialists, 3 OpenAI API channel specialists, and 1 IDC planning consultant, making our report highly substantiated.