Prediction: Microsoft Will Double Its Paid Copilot Seats …
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Seat additions are speeding up
Highlighting how fast adoption has picked up, Microsoft’s paid Copilot seat count was 15 million as of December. By March it crossed 20 million, and seat additions in the quarter grew 250% year over year, CEO Satya Nadella said in April. And by June, the total passed 30 million. So the company added around 5 million seats in its fiscal third quarter. It then added about 10 million — more than double that — in its fiscal fourth quarter of 2026 (the quarter that ended June 30, 2026).
To go from 30 million to 60 million in the next four quarters, Microsoft needs around 7.5 million net new seats a quarter. That rate is around 25% under what it managed in the June quarter.
The deals behind these numbers are getting bigger, too. The number of customers with more than 50,000 seats climbed more than sevenfold year over year, Nadella said on the July earnings call, and HSBC alone committed to 200,000 seats.
How much room is left?
Microsoft had more than 450 million paid Microsoft 365 commercial seats as of December, a base that’s been growing around 6% a year. So 30 million Copilot seats cover only about 7% of it.
Even at 60 million, Copilot would reach only around one in eight paid Microsoft 365 commercial users.
Microsoft is also bundling Copilot into a bigger software package. Its Microsoft 365 E7 suite, available since May 1, combines Copilot with the company’s E5 offering and Agent 365, a tool to manage AI agents.
The Sept. 25 revamp might help too. With Word, Excel, and PowerPoint in the Copilot app, Microsoft seems to want people to start their work in Copilot instead of treating it as an add-on.
Of course, the new setup is rolling out first through Microsoft’s Frontier early-access program in the coming weeks, and any impact on seat sales may take time to show up.
Copilot is already boosting revenue per user
Microsoft 365 commercial cloud revenue rose 17% year over year in fiscal 2026 (the 12 months ended June 30), but paid Microsoft 365 commercial seats grew just 6%. Microsoft’s annual report credits the growth in revenue per user to Microsoft 365 Copilot and its E5 offering. Across products and cloud services, the Microsoft 365 commercial business took in around $102 billion for the year, up 16%. And for the September quarter, management guided in July for Microsoft 365 commercial cloud revenue to climb about 16% in constant currency, adjusting for an unusual prior-year comparison (about 18% after Microsoft shifted GitHub and Security Copilot revenue to that line in September).
“[W]e expect to see acceleration in M365 Commercial cloud revenue growth through this fiscal year,” said Amy Hood, Microsoft’s chief financial officer, on the July call.
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But Copilot isn’t free to run. Cost of revenue in the productivity and business processes segment, home to Microsoft 365, rose 12% in fiscal 2026 on AI infrastructure for Copilot’s seat and usage growth, while the segment’s operating income still climbed 20%.
The seat growth is one reason I think Microsoft’s business is healthy. Microsoft stock, at around $516 as of this writing, costs about 29 times fiscal 2026 earnings, versus about 26 times earnings for the S&P 500 (^GSPC -0.77%).
This valuation arguably reflects a lot of AI success already.
Ultimately, I think 60 million paid seats by the end of June 2027 is a reasonable call, because Microsoft only has to add them more slowly than it just did. But it’s a prediction. A soft quarter or two might delay the milestone a few months.
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About the Author
Daniel Sparks is a contributing Motley Fool stock market analyst covering technology, industrials, financials, and consumer goods. Daniel is the owner and chief investment officer of Sparks Capital Management. He holds a master’s degree in business administration from Colorado State University. The Globe and Mail profiled him and his investing philosophy in an article titled, “This stock picker is outperforming nearly everybody else. Here’s how he is doing it.”
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