Microsoft Stock Falls on Lowered AI Targets and Legal Complaint

Microsoft's stock dropped up to 3% after it quietly lowered AI sales targets due to missed goals and slower adoption. The company also faces a legal complaint in Ireland over alleged EU privacy law violations.

Microsoft has revised its AI revenue expectations downward after slower-than-anticipated adoption of its AI tools, leading to missed sales targets and a negative impact on its stock, which fell by up to 3%. Multiple reports indicate that internal sales quotas for Azure Foundry, Microsoft's cloud-based AI marketplace, were quietly lowered after less than 20% of sales teams met ambitious growth goals. Microsoft disputes claims of lowering aggregate quotas, stating that growth projections and compensation structures differ, and that the reports inaccurately conflated growth targets with quotas. The company maintains that AI remains central to its long-term strategy, supported by its partnership with OpenAI and continued investment in AI infrastructure. Additionally, Microsoft faces a legal complaint in Ireland alleging it facilitated the transfer of Israeli military surveillance data from European servers, potentially violating EU privacy laws. Microsoft asserts that customers control their data and notes it ceased certain services in September. The developments have heightened investor concerns about the pace of enterprise AI adoption and regulatory risks.