Microsoft Stock Drops 3% After Quietly Cutting Internal AI Sales Targets Amid Weak Performance
Microsoft just got a reality check—and Wall Street didn't like it. The tech giant's stock tumbled 3% after internal documents revealed a quiet retreat on its AI sales ambitions. Weak performance forced the hand; targets got cut. No fanfare, no press release—just a spreadsheet adjustment that cost shareholders billions.
The AI Hype Meets the Spreadsheet
For months, the narrative was unstoppable: AI is the future, and Microsoft is its engine. Then the quarterly numbers landed. The gap between promise and delivery grew too wide to ignore. The internal response wasn't a doubling down, but a dialing back. Sales teams got new, lower targets. The market got the message instantly.
A 3% Dip Is Just the Surface
That stock drop translates to a staggering loss in market capitalization. It's a direct referendum on AI's near-term profitability. When a titan like Microsoft quietly recalibrates its flagship growth story, it sends a tremor through the entire sector. It's the finance equivalent of a captain quietly ordering lifeboats while the band still plays on deck.
The real story isn't the cut—it's the quiet. No bold restructuring announcement, just internal memos and adjusted quotas. It speaks to a lack of confidence, a hope that maybe no one would notice the ambition shrinking. But the market always notices. It's a classic move: manage expectations downward so the next 'beat' looks like a win. For investors banking on AI's infinite growth, it's a cold splash of spreadsheet reality.
Microsoft says targets weren’t lowered, denies report
When asked about the internal reset, a Microsoft spokesperson told The Information, “The Information’s story inaccurately combines the concepts of growth and sales quotas, which shows their lack of understanding of the way a sales organization works and is compensated.”
They added, “Aggregate sales quotas for AI products have not been lowered, as we informed them prior to publication.”
But it’s not just Microsoft. Some companies also allegedly told The Information that it’s still hard to calculate actual savings from using AI on routine tasks, and they’re concerned about the high cost of errors made by the models.
The Foundry marketplace, the focus of these failed targets, is not the same thing as Copilot. Copilot bundles AI into Microsoft’s office tools. Foundry is for developers building agents from scratch.
Most of the computing demand tied to AI workloads, though, still comes from OpenAI, which runs independently of Foundry. That relationship isn’t affected by the quota issue, but it doesn’t help with Foundry’s performance either.
Complaint in Ireland says Microsoft helped hide Israeli surveillance
The other problem for Microsoft landed the same day. An activist group filed a complaint with Ireland’s Data Protection Commission, accusing the company of violating EU privacy law by helping Israel’s military shift sensitive surveillance data out of Europe.
The complaint was based on information from Microsoft employees and internal records.
The complaint said that after a news article from The Guardian and Israeli outlets in early August revealed Microsoft’s servers stored millions of intercepted Palestinian phone calls, activity spiked.
A day after that article came out, three accounts tied to the Israeli military requested higher data transfer limits on Microsoft’s Azure platform. Internal approvals followed. The amount of data in those accounts plunged immediately afterward.
The company’s spokesperson allegedly responded, saying, “Our customers own their data, and the actions taken by this customer to transfer their data in August was their choice.” The spokesperson added, “These actions in no way impeded our investigation. That investigation led to a decision to cease some services in September, and ultimately to the customer storing their data with another provider.”
The investigation involved employees who worked directly with Israeli officials and was supported by business records. The complaint demanded that the Irish commission launch an immediate probe and block Microsoft from processing military and government data where it breaches EU law.
The European headquarters of Microsoft is located in Ireland, which gives the Irish Commission the job of enforcing the General Data Protection Regulation for the company.
Meanwhile, Israel’s conduct in Gaza continues to draw criticism. The International Criminal Court has issued arrest warrants for Israeli officials, accusing them of using starvation and deliberate attacks on civilians during the war. Israel denies the allegations.
None of this is new for Microsoft, which has faced employee protests and outside pressure over its ongoing contract with Israel’s Ministry of Defense. But the events of Wednesday brought two serious problems to the front—a business miss on AI, and a global accusation over war data.
Join Bybit now and claim a $50 bonus in minutes
