Microsoft Revamps Leadership and Inks Custom Chip Deal as GitHub Copilot Struggles to Hold Its Lead

Satya Nadella replaces senior leadership with core group, plans Anthropic chip deal, while GitHub Copilot loses share and Forza Horizon 6 sets sales record.

Satya Nadella has dissolved Microsoft’s traditional senior leadership team, replacing it with a five-member core group and a 35-strong engineering unit as the company prepares for what he calls the “agentic era” of superintelligence. The restructuring, which melts away decades of hierarchy, comes alongside the departure of 35-year veteran Yusuf Mehdi, who will remain through fiscal 2027 to oversee the “One Copilot” vision. It is the clearest signal yet that Microsoft is rethinking not just its product roadmap but the way it executes.

The shifts in personnel are matched by an equally bold move in hardware. Microsoft is in advanced talks to let Anthropic — a key AI partner in which it has invested billions — rent servers powered by its in-house Maia 200 chips. Fabricated by TSMC on a 3-nanometer process with over 140 billion transistors and 216 GB of HBM3e memory, the chip promises a 30% better performance-to-cost ratio than existing Azure offerings. However, the Maia 200 is designed for inference, not training, making it a natural fit for Anthropic’s cloud-agnostic strategy of optimizing operational costs without sacrificing model quality. The deal would mark the first time Microsoft lets an external developer use its custom silicon, potentially loosening its dependence on Nvidia.

While the chip push advances, Microsoft’s other AI front is under pressure. GitHub Copilot, once the undisputed leader in AI-assisted coding, has seen its market share among professional developers tumble from 67% in 2025 to 51% in 2026, according to the Stack Overflow Developer Survey. Rivals have seized the opportunity: Cursor jumped to 29% and Amazon Q Developer reached 14%. The erosion reflects deeper infrastructure woes — between May 2025 and April 2026, GitHub logged 257 incidents, including 48 major outages and 57 affecting GitHub Actions. A security breach that compromised a employee device and exposed roughly 3,800 internal code libraries added to the reputational damage. In response, GitHub has created a dedicated Copilot reliability team, frozen development for a week to focus on stability, and begun publishing real-time health data for individual components. An engineering manager admitted on May 22 that the platform had fallen short of its own availability standards.

Amid these challenges, one bright spot comes from an unexpected source. Forza Horizon 6 sold nearly 5 million copies in its early-access week across Steam and Xbox Series, generating over $325 million in revenue — the strongest early-access launch in the racing franchise’s 14-year history. Critical reception has been stellar too, with scores of 91 on OpenCritic and 92 on Metacritic. The breakout helped offset a broader 6% decline in gaming revenue and a 31% plunge in Xbox hardware sales. Microsoft is now preparing a PlayStation 5 version for later this year, following Forza Horizon 5’s 5 million sales on Sony’s console since its PS5 launch in April 2025.

The contrasting fortunes of gaming and developer tools sit inside a business that remains financially formidable. In the third fiscal quarter of 2026, Microsoft posted revenue of $82.9 billion, up 18% year over year, with operating income climbing 20% to $38.4 billion. Diluted GAAP earnings per share reached $4.27. Microsoft Cloud revenue surpassed $54 billion, growing 29%, while the AI business hit an annualized revenue run rate of over $37 billion. Yet the figures come with nuance: 45% of commercial remaining performance obligations are tied to OpenAI, and stripping out that relationship, growth slows to 26%. Without OpenAI, commercial bookings rose just 7%.

The share price reflects that ambiguity. At €360.90, Microsoft stock has slipped 0.63% over the past week and is down 10.58% year to date — roughly 23% below its 52-week high of €467.45. The technical picture is mixed: about 5% above the 50-day moving average but 8% below the 200-day. Still, analysts remain bullish, with Wedbush setting a $575 target and others ranging from $547 to $640, anchored by sustained Azure AI demand. A dividend of $0.91 per share is scheduled for June.

On the legal and institutional side, Microsoft has closed a chapter from the Activision Blizzard acquisition. It will pay $250 million to settle claims from former Activision shareholders, including Sweden’s Sjunde AP-Fonden, who argued the $68.7 billion deal disadvantaged them. No admission of liability was made. Meanwhile, Vanguard has increased its stake by 2.3%, now holding over 717 million shares — roughly 5% of Microsoft’s total outstanding equity.

Markets were closed Monday for Memorial Day, and the spotlight when trading resumes is likely to fall less on Forza’s sales figures and more on whether Microsoft can stabilise GitHub Copilot while simultaneously pushing its own silicon into the hands of a rival AI developer. The next major checkpoint comes at the end of July, when quarterly results will reveal more about the margins and investment trajectory behind the company’s twin AI bets.