Overview

A class action lawsuit has been filed against Microsoft Corporation (“Microsoft” or the “Company”) (NASDAQ : MSFT), and certain of the Company’s senior officers (collectively, “Defendants”), alleging violations of the federal securities laws. The Microsoft lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired Microsoft common stock between May 1, 2025, and January 28, 2026, inclusive (the “Class Period”). Investors have until August 11, 2026, to seek appointment as lead plaintiff of the Microsoft class action lawsuit.

Microsoft is one of the world’s largest technology companies, offering enterprise software, cloud computing, online services, gaming, hardware, and artificial intelligence products. In recent years, the Company’s Azure cloud platform has served as a key growth driver, with Microsoft increasingly incorporating artificial intelligence capabilities into Azure and its broader suite of products and services.

According to the complaint, throughout the Class Period, Defendants repeatedly touted the strength of the Company’s AI strategy, the growth of Azure, and the purported success and adoption of its Copilot family of products. Defendants allegedly represented that Copilot offered best-in-class AI capabilities, enjoyed widespread and growing customer adoption, improved productivity, and supported Microsoft’s continued cloud and AI growth.

The complaint alleges that these statements were materially false and misleading because Microsoft failed to disclose that its Copilot products were experiencing significant brand-positioning, user-experience, usage, data-siloing, computational-capacity, organizational, and interoperability problems. The complaint further alleges that Microsoft’s proprietary AI model ranked below competitors on benchmark tests, that the Company needed to increase capital expenditures by billions of dollars and divert computing capacity away from Azure services to improve Copilot, and that Microsoft had failed to convert a significant percentage of commercial Microsoft 365 users to paid Copilot subscriptions while losing market share to rival AI products.

The truth began to emerge on January 28, 2026, when Microsoft announced disappointing fiscal second-quarter 2026 results. The Company disclosed that Azure growth had slowed and fallen below analyst expectations. During the related earnings call, Microsoft’s CFO revealed that the slower Azure growth was primarily due to computational capacity constraints, as the Company had diverted central processing unit and graphics processing unit capacity to Copilot applications and AI-related research and development. Microsoft also disclosed that capital expenditures had increased to $37.5 billion for the quarter and that paid Microsoft 365 Copilot seats totaled only 15 million, materially below analyst expectations.

On this news, Microsoft’s stock price declined nearly 10%, falling from $481.63 per share at the close of trading on January 28, 2026, to $433.50 per share at the close of trading on January 29, 2026.

Then, on February 3, 2026, The Wall Street Journal reported that Microsoft’s Copilot offerings had experienced severe functionality, user-experience, interoperability, and organizational problems, and that Copilot was losing market share to competing products. According to the complaint, Microsoft’s stock price continued to decline as investors digested these revelations and related analyst commentary concerning the connection between Copilot’s problems, Azure capacity constraints, and Microsoft’s rising AI-related spending. As a result of this news, price of Microsoft stock continued to fall, dropping to a low of just $380 per share by March 20, 2026 – 30% below the Class Period high.

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If you purchased or otherwise acquired Microsoft common stock between May 1, 2025, and January 28, 2026, and you wish to serve as lead plaintiff in this lawsuit, you are encouraged to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt attorneys Brian O’Mara and Hani Farah by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as a lead plaintiff in the Microsoft class action lawsuit is August 11, 2026.