Microsoft’s push toward “per user and usage” could be the real driver investors are looking for

Microsoft’s stock has faced a lack of lift in recent months even as investors remain focused on its AI portfolio. One explanation offered in a recent market note is that the company’s bigger change is not a new product, but a business-model shift that could allow Microsoft to capture more value from what customers do with AI tools, not just from seats and subscriptions.

The analysis frames Microsoft as moving from a traditional software sales approach to a “per user and usage business,” where revenue is increasingly tied to how much customers use AI capabilities and how many tasks are completed. The difference is material: it aims to move beyond charging for access to software toward charging for each meaningful action taken through AI systems.

On the company’s AI front line, the note points to Microsoft 365 Copilot, Microsoft’s assistant built into the Microsoft 365 productivity suite, including apps like Word, Excel, PowerPoint, Outlook, and Teams. According to the analysis, Microsoft now has “over 20 million Microsoft 365 Copilot paid seats,” and seat growth is accelerating.

The market note also cites an apparent inflection in adoption. It says that in the most recent quarter, Microsoft’s Copilot seat additions increased 250% year over year, described as the fastest growth since the product’s launch. That matters for the “usage” thesis because Copilot seats are the gateway that can lead to more downstream usage and consumption of AI-enabled work within Microsoft’s core customer base.

The same analysis links Microsoft’s current market valuation mood to the broader narrative investors are seeking. It says Microsoft shares are down about 20% over the past year and trade about 28% below their 52-week high, despite the attention focused on AI. In that context, the argument is that markets may be underestimating how quickly Microsoft’s monetization model could re-rate the value of each customer as AI adoption scales.

Still, the shift toward usage-based monetization is a complex one. A “per user and usage” model requires customers to consistently perform enough AI-enabled work to justify incremental billing, while Microsoft must align its pricing, capacity, and delivery to actual demand patterns. It also means that reported growth rates could depend not only on seat additions but on how much use those seats generate, which is typically more difficult for investors to forecast than a simple subscription count.

What Microsoft does disclose about these transitions, and what it does not, is likely to determine how much conviction investors can place in the story. The market note emphasizes paid seats and seat growth, but it does not, in the excerpt available here, provide the company’s own disclosures about usage levels, take-rate economics, or how much incremental revenue the “usage” component is producing. In other words, the core claim is directionally about business-model evolution, but the revenue mechanism’s magnitude may still be unclear from the published material.

Going forward, investors will likely watch for confirmation in Microsoft’s reporting that AI products tied to Copilot and other assistant capabilities are not just adding seats but translating those seats into higher monetization per user. The next key question is whether Microsoft can sustain rapid adoption without eroding margins, as consumption grows and capacity demands rise for AI workloads.