Microsoft Reshuffles its C-Suite as GitHub Stumbles and Forza Revs Up — Investors Eye AI Payoff

Nadella flattens Microsoft structure for AI, committing $190B, but GitHub outages and stock near 11-month lows weigh.

A sweeping leadership overhaul at Microsoft is ushering in a flatter organizational structure designed to accelerate artificial-intelligence development, even as operational cracks emerge in the company’s developer tools business and the stock languishes near 11-month lows.

Two long-serving executives are heading for the exits. Rajesh Jha will retire in July, while marketing veteran Yusuf Mehdi — a 35-year Microsoft hand who helped launch Windows 95 and the Xbox — plans to depart by June 2027. During his transition period, Mehdi will focus on adapting Windows for autonomous AI agents. Chief executive Satya Nadella is thinning management layers to push new AI solutions to market faster, a move that comes as the company commits roughly $190 billion this year to infrastructure, chiefly Azure data centres and OpenAI capacity.

GitHub’s Growing Pains

Yet the cloud giant’s ambitions are colliding with stubborn operational issues. GitHub, the developer platform Microsoft acquired in 2018, has suffered more than a dozen outages lasting over an hour since March. The culprit, insiders say, is a delayed migration from legacy data centres to Microsoft’s own Azure cloud. The problems have opened a door for rivals: Cursor, a start-up founded by a former GitHub vice-president, now boasts four million users and was recently valued at $10 billion in a funding round.

The situation worsened after hackers exposed roughly 3,800 internal code libraries, dealing a blow to GitHub’s reputation for security. “The platform’s reliability is no longer a given,” noted one industry analyst, speaking on condition of anonymity.

Bright Spots in Gaming and Cloud

Offsetting the developer-side headaches, Microsoft’s gaming division delivered a standout performance. “Forza Horizon 6” sold nearly five million copies in its first week, generating gross revenue exceeding $325 million. An additional three million players accessed the title through Game Pass. Analyst Rhys Elliott warned that the subscription model may be cannibalising direct sales on Steam and Xbox, but Microsoft is pressing ahead with a PlayStation 5 port planned for 2026.

Meanwhile, the picture at LinkedIn is mixed. The professional network will cut more than 600 jobs in California this year, affecting engineering, marketing and product teams — even though LinkedIn’s revenue rose 12% in the latest quarter. The layoffs are part of a broader cost discipline that helped Microsoft post strong numbers for its fiscal third quarter.

Strong Numbers, Subdued Stock

Revenue for the quarter ended March reached $82.9 billion, up 18% from a year earlier, while operating profit expanded 20%. Earnings per share came in at $4.27, beating consensus estimates. The AI business alone is now generating an annualised revenue run-rate of $37 billion, driven by corporate clients deploying custom agents on Azure.

Despite that momentum, Microsoft shares have struggled. The stock closed at €360.90 on Friday, a decline of roughly 11% since the start of the year. It has found technical support at its 50-day moving average of around €344, but remains well below its record high. Analysts remain broadly bullish, with a consensus price target of $560.88. Several firms have raised their earnings forecasts for fiscal 2026.

What’s Next

Income-focused investors have a June date circled for the next quarterly dividend of $0.91 per share. The more consequential milestone, however, comes in late July, when Microsoft reports its next set of quarterly results. The market will be watching for improving profit margins in the cloud business and, crucially, evidence that the infrastructure woes at GitHub are being resolved. Until then, the combination of a leadership shake-up and operational turbulence has kept even the most optimistic analysts on edge.