Microsoft’s Copilot Consolidation and Nvidia Alliance Fuel a June Rally — But the Costs Are Mounting

Microsoft shares climb as it plans unified Copilot app, partners with Nvidia for chips, and shifts GitHub Copilot to credit-based pricing due to soaring AI costs.

Microsoft shares surged 3.3% to €398.75 on the first trading day of June, with turnover more than doubling to 79.65 million shares. Two catalysts drove the move: a long-awaited plan to unify its sprawling Copilot ecosystem into a single super-app, and a hardware partnership with Nvidia that diversifies its chip strategy away from Qualcomm. Yet beneath the rally, the company is also restructuring how it charges for its most popular AI tool — a sign that the cost of running AI at scale is reshaping its business model.

The centrepiece of Microsoft’s software push is a new unified Copilot application designed to end customer frustration with the current proliferation of assistants across GitHub, Teams, Office and other products. Jacob Andreou, the recently appointed head of the Copilot division, is tasked with merging the consumer and enterprise experiences into one hub. Users will be able to toggle between personal and work accounts. The app is slated for a launch by the end of the summer, though it will not be previewed at this week’s Build conference, where only individual components may be mentioned.

The urgency is underscored by adoption figures that remain stubbornly low: fewer than 4.5% of Microsoft 365’s roughly 450 million users pay for Copilot features. GitHub Copilot, while boasting over 4.7 million paying subscribers, faces rising competition from Cursor and Anthropic’s Claude Code. Microsoft hopes the super-app will transform Copilot from a feature into a workplace — a place where tasks run autonomously rather than just starting there. Meanwhile, Google Gemini and Anthropic are steadily grabbing market share in paid AI subscriptions.

In a parallel move, Microsoft is overhauling how GitHub Copilot is monetised. As of 1 June 2026, the flat-rate subscription model has been replaced by a credit-based system. Users now consume AI credits depending on task intensity; Pro subscribers receive $10 worth of credits monthly, Pro+ users $39. The company cited the rising computational load from autonomous coding agents, advanced debugging and real-time code reviews as reasons the old flat fee could no longer cover costs. The change comes as Microsoft’s AI infrastructure spending hits unprecedented levels — $30.88 billion in capital expenditure in the third quarter alone, up 84%, with a full-year 2026 target of roughly $190 billion.

That spending binge is backed by a staggering $625 billion in remaining performance obligations from commercial contracts, representing roughly two and a half years of visible revenue, even after excluding the $281 billion tied to the OpenAI partnership. Additional support comes from a $9.69 billion, five-year deal with the U.S. Department of Defence, announced on 28 May, making Microsoft the primary provider of Windows, Microsoft 365 and Azure services to the armed forces.

On the hardware front, Nvidia CEO Jensen Huang used the Computex conference in Taipei to unveil the N1X processor, developed jointly with Microsoft. The chip will be integrated into the RTX Spark superchip and power a new generation of Windows PCs from Dell, HP, ASUS, Lenovo and MSI starting this autumn. These devices will carry the “Copilot+ PC” label and fully support Microsoft’s latest AI features, including Recall, Windows Studio Effects and live captions. The move breaks Qualcomm’s exclusivity as the premium Arm design partner, giving OEMs and customers a choice.

Microsoft’s AI business is now running at an annualised revenue run rate of $37 billion, a 123% year-on-year increase. The next dividend payment of $0.91 per share is due on 11 June, yielding 0.9%. In the second quarter of fiscal 2026 alone, $12.7 billion was returned to shareholders, up 32% from a year earlier. Yet regulatory headwinds are gathering: the UK’s Competition and Markets Authority launched a broad antitrust investigation into Microsoft’s software ecosystem in May, focusing on Microsoft 365, Teams, Azure and Copilot, while the U.S. FTC is examining AI partnerships and cloud licensing terms. The stock now trades 14.7% below its 52-week high of €467.45 but 28.5% above the low of €310.25. Year to date, it is down 1.2%, with volatility at 32%. With Build kicking off tomorrow, investors will watch closely for signals on Azure’s 39% growth trajectory and traction for Microsoft’s vision of agentic computing.