Microsoft’s latest update on its AI products shows how quickly GitHub Copilot has moved from a developer feature into a major business line. The company says the AI coding tool is now bigger than GitHub was when Microsoft acquired it, while demand for AI services is also putting pressure on Azure infrastructure.
GitHub Copilot moves from tool to major business
CEO Satya Nadella described GitHub Copilot as the most widely used tool in its category. The product now contributes more than 40 percent of GitHub’s revenue growth this year, according to Microsoft.
Adoption has also expanded sharply. More than 77,000 organizations are currently using GitHub Copilot, which Microsoft says is a 180 percent increase from last year.
Nadella framed the scale of the business in direct comparison with GitHub itself. He said, "[Github Copilot] is already a larger business than all of GitHub was when we acquired it." Microsoft bought GitHub in 2018 for $7.5 billion in stock.
That comparison matters because it places GitHub Copilot in a different category from a simple add-on. Based on Microsoft’s own description, the AI coding tool has become a substantial driver inside GitHub rather than a narrow productivity feature used by a small slice of developers.
Microsoft 365 Copilot is also gaining daily use
Microsoft’s Copilot growth is not limited to software development. Nadella also said Microsoft 365 Copilot is becoming "a daily habit for knowledge workers, as it transforms work, workflow, and work artifacts."
The company reported that daily users of Microsoft 365 Copilot have nearly doubled from the previous quarter. Its customer base has also grown by 60 percent.
Microsoft is presenting Copilot as a broad layer across work and consumer products. Consumers have created well over 12 billion images and had 13 billion chats using Copilot, an increase of 150 percent since the beginning of the year.
The company has integrated Copilot into many services, including Bing and Paint. That wider distribution helps explain why Microsoft is reporting activity across different kinds of usage, from workplace tasks to image creation and chat.
Azure demand is running ahead of capacity
The growth in AI usage is also creating an infrastructure problem for Microsoft. Chief Financial Officer Amy Hood said AI services accounted for eight percentage points of Azure’s growth, while demand exceeded the capacity Microsoft had available.
Hood described the issue plainly: "We are, and we’ve talked about it now for quite a few quarters, we are constrained on AI capacity. And because of that, actually, we, to your point, have signed up with third parties to help us as we are behind with some leases on AI capacity," Hood said.
Microsoft added more than 60,000 Azure AI customers year over year, an increase of nearly 60 percent. Nadella also noted that average spend per customer continues to rise.
Even with that demand, growth was not uniform. In some European regions, growth in June fell short of Microsoft’s expectations. The source does not identify those regions, but the point is important: demand for Azure AI is strong overall, while some markets still performed below what Microsoft expected.
Investors focused on costs as much as growth
The stock market’s first reaction was negative. Microsoft shares were down about seven percent in after-hours trading after the numbers were released.
The company’s AI and Azure cloud growth of 30 percent barely met expectations. At the same time, capital expenditures more than doubled from two years ago to nearly $19 billion, driven in part by heavy spending on AI-enabled data centers and chips.
That combination shows the tension around Microsoft’s AI business. Copilot and Azure AI are generating growth, customer adoption is rising, and usage is expanding across products. But the infrastructure needed to support that demand is expensive, and Microsoft says it is still constrained on AI capacity.
For the most recent quarter, Microsoft reported revenue growth of 15 percent to $64.7 billion and profit growth of 10 percent to $22 billion. Those figures show that the company is still growing overall, even as investors weigh how much AI infrastructure spending will be required to keep up with demand.
What the Copilot numbers show
The clearest takeaway is that GitHub Copilot is no longer an experimental AI product inside Microsoft’s portfolio. By Microsoft’s account, it is now larger than GitHub was at acquisition and is responsible for a major share of GitHub’s revenue growth this year.
The broader Copilot story is similar: usage is rising, customer counts are increasing, and Microsoft is embedding AI across more services. The limiting factor, at least for now, is not only whether customers want the products. It is also whether Microsoft can supply enough AI capacity to meet that demand.