Microsoft is shifting its AI strategy to power Excel and Outlook with in-house models. This transition reduces the company's reliance on external partners OpenAI and Anthropic. Management aims to lower substantial third-party model costs to improve long-term profitability.
The pivot coincides with a restructuring involving nearly 4,800 employee layoffs. Microsoft continues to invest heavily in AI infrastructure despite the workforce reductions.
Company shares fell approximately 1.5% following reports of the strategic shift. The stock recently reached a one-year low during this downturn.