Microsoft Ships Copilot Cowork Amid Oracle Fallout and a $190 Billion Capex Pile-Up

Microsoft's new AI agent Copilot Cowork goes live but stock drops 2% as investors focus on $190B capex forecast and scrapped Oracle cloud deal.

The launch of Microsoft’s most ambitious AI product yet failed to ignite its stock, as investors continued to digest the staggering costs behind the company’s cloud expansion. The software giant put Copilot Cowork into global commercial operation on June 16, but shares gave up nearly 2% on Wednesday to close at €332.75 — roughly 30% below the October peak. The move came the day after the stock had settled at €339.50, a 16% year-to-date loss that has dragged the RSI to 40.4, close to oversold territory.

Copilot Cowork marks a conceptual shift from earlier AI assistants. Instead of generating drafts, it autonomously executes multi-step tasks and returns finished outputs. During a three-month preview, more than half of the Fortune 500 tested the tool, including Accenture, Capital Group, Koch, and Zurich Insurance. Microsoft now positions the product as the transition from chatbots to enterprise-grade agents.

A key structural change is the pricing model. Customers still need a Microsoft 365 Copilot subscription, but Cowork usage is billed separately via Copilot Credits at $0.01 apiece. The final price depends on the AI model used, data volume, and runtime. This creates a second revenue stream alongside traditional per-seat licensing. At launch, Cowork runs on Anthropic’s Opus 4.8 and Sonnet 4.6, with GPT 5.5 available for frontier customers. Microsoft’s own Cowork 1 model is on the roadmap. Nine partner plugins — Harvey, Miro, Morningstar, S&P Global Energy, and LSEG among them — are already live, with eight more due soon. Administrators can set budgets, spending caps, and alerts at the enterprise, group, or user level.

Yet the product news arrived against a backdrop of escalating capital demands. Microsoft has forecast roughly $190 billion in capital expenditure for fiscal 2026, with about $25 billion of that attributed to higher component prices. Demand continues to outstrip capacity, the company said, but the market is weighing how quickly those outlays translate into profitable growth. The company already reported strong AI metrics in its third fiscal quarter: over 20 million paid Copilot seats — up 250% year over year — and Copilot credit consumption nearly doubling quarter over quarter. Cloud revenue hit $54.5 billion, up 29%, with Azure growing 40%. Still, the stock has slid, trading below both its 50-day moving average of €353.92 and its 200-day average of €387.66.

Complicating the picture, a separate report revealed that Microsoft has scrapped a $3 billion cloud-capacity deal with Oracle. The negotiations broke down, according to insiders, because Oracle’s cloud infrastructure lacked a required FedRAMP security certification, preventing Microsoft from offloading sensitive U.S. government data to the rival platform. Oracle denied the claim, calling reports inaccurate and pointing to ongoing partnerships. Microsoft declined to comment. The collapse of the deal underscores the lengths the company is willing to go to rein in infrastructure costs — even as its own AI product launch demands ever more compute.

To further manage expenses, Microsoft is testing DeepSeek V4, an open-source Chinese model, for simpler tasks. The software runs exclusively on Azure servers to address security concerns, allowing the company to reserve high-end models like Anthropic’s and OpenAI’s for the most demanding workloads. The strategy is part of a broader push to reduce reliance on external providers and build out its own data center network.

The success of the usage-based billing model will now determine whether the massive infrastructure investment pays off. If Copilot Cowork drives enough consumption to justify the capital outlay, margins could improve in the second half. If not, the $190 billion question will only grow louder. Microsoft is expected to report its current quarter’s results around the end of July.