On the 20VC podcast, Microsoft CEO Satya Nadella said most AI token usage will be commodity usage, though there will always be a market for frontier models. He said Copilot already uses many cheaper closed-source models, and noted that the Productivity and Business Processes segment, which includes Office and Microsoft 365, earned 54.0% of operating income in fiscal 2026. Gross margin fell from 69.8% in fiscal 2024 to 67.9% in fiscal 2026, while capital spending climbed to $116 billion, and falling token prices could make that spending harder to earn back. Microsoft Cloud's gross margin dropped from 68% in the September 2025 quarter to 65% in the June 2026 quarter, and management guided it to hold near 65%, which the Oct. 28 report will show. Commercial remaining performance obligations reached $678 billion at June 30, 2026, up 84%.
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Related tickers and likely impact
MSFT
• NeutralMicrosoft
Relevance: low
| Market | US stocks |
|---|---|
| Sector | Information Technology |
| Industry | Systems Software |
| Market cap | $3.9T |
| Close on 10/23/2026 | 524.51 |
| Change that session | +0.66% |
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