Microsoft working to reduce AI costs, expand ecosystem as global adoption rises
Microsoft is working to make artificial intelligence (AI) services cheaper and build a larger network of AI tools, services, and partners. The company's Chairman and CEO, Satya Nadella, explained these plans in his yearly letter. He said Microsoft is preparing for a future where more people and businesses around the world use AI.
Nadella said that "Super Intelligence" is changing what organisations need to do their work and what they can produce. He also explained that inference, which is when AI uses what it has learned to give answers or complete tasks, is making the cost of each extra AI task an important part of how software businesses work.
Nadella said customers will increasingly compare the cost of AI tokens, which are small pieces of text or data that AI systems process, with the results they get. He called this the "cost-to-outcome" frontier. Microsoft is working to improve this balance so customers can get better results for the money they spend.
According to Nadella, Microsoft's goals in the new age of superintelligence are not only about taking advantage of the many opportunities AI offers. The company also wants AI to bring useful, real-life benefits to countries, communities, and businesses around the world.
Nadella said Microsoft has many different technologies, businesses, and ways of making money. It also focuses on building platforms and working with partners. He explained that Microsoft wants to create an advanced AI ecosystem where other companies and developers can build their own products and services. His goal is for these outside businesses to create even more value using Microsoft's ecosystem than Microsoft keeps for itself.
According to the letter, Microsoft is spending money to support many different types of customers. At the same time, it is building the technology and systems needed to run its own special, high-value products, such as Copilot.
Nadella said he is confident that Microsoft's investments will bring good returns over the long term. This confidence comes from the strong customer demand the company is seeing and the improvements it is making to work more efficiently. He said Microsoft is carefully deciding what to build and who will use it. The company is investing in technology that can serve many different customers while also supporting its own products, including Copilot, which are designed to offer special features and strong value.
Nadella also said Microsoft is working faster to increase the amount of computing power and technology it can provide. The company is making its technology systems more efficient and lowering costs. These efforts are meant to help customers grow and create lasting value for Microsoft's shareholders.
Nadella also shared Microsoft's financial results. In the 2026 financial year, Microsoft earned $331.8 billion in revenue, which was 18 per cent more than the previous year. Microsoft Cloud revenue increased by 27 per cent to $214.4 billion. Azure grew by 41 per cent, and its revenue passed $100 billion for the first time. Microsoft 365 Copilot also reached more than 30 million paid seats, meaning paid places for people to use the service. Microsoft's operating income, which is the money it earns from running its business before certain other costs, increased by 21 per cent to $155.2 billion.
Nadella said that as Super Intelligence moves beyond testing and experiments and becomes widely used, Microsoft wants to make sure its benefits and financial value are shared. The company wants these benefits to make a lasting, positive difference for people, organisations, and communities.