MSFT FY4Q25:Copilot Studio, GPT4.1/O3/Image 1, GPU Cloud, Agents and Customer Service Layoffs

In our Preview|MSFT FY3Q25 report, we called the fundamental bottom and explained why we believe Azure will significantly exceed Street expectations:

• Through our research, we discovered Azure onboarded significant GPU capacity in FY3Q25, related to OpenAI's decoupling from MSFT

• OpenAI's inference consumption surged in FY3Q25, and with ChatGPT launching O3, OpenAI's gross margins declined significantly that quarter, indicating a jump in OpenAI's inference compute

After a quarter, more institutions are beginning to notice these two points we highlighted.

Pre-earnings, we conducted focused discussions with seven experts. We see more surprising progress from Microsoft, including:

• Copilot Studio advancing rapidly, with scale significantly exceeding Now Assistant and Agentforce

• Customer feedback on GPT4.1 and O3 significantly improved, and we're hearing for the first time that GPT 4.1 and Image 1 are in supply shortage

• TikTok added Azure GPU Cloud orders

• Azure is using agents to replace human customer service at considerable scale

• Azure is undergoing reorganization

Let's begin our MSFT Preview report.