Microsoft's share price has slid 22% in the past year, as investors increasingly cast doubt on the firm's long-term AI strategy.

Artificial intelligence has been billed as the next coming by Big Tech, with everyone from Amazon to Google trying to figure out how to leverage the expensive technology to generate profits. The problem is, nobody is even close to having an answer.

Generative AI is incredibly costly to run, and the return on investment is unclear at best. Many companies are starting to discover that, in fact, it's cheaper and more effective to simply use human labor. Companies that previously laid off engineers in favor of AI models later found themselves crawling back to those fired, and others have put large restrictions on token expenditure as returns remain elusive.

I saw a clip on CNBC from Ed Zitron, creator of the Where's Your Ed At newsletter and host of the Better Offline podcast recently. It summarized Microsoft's AI conundrum in pro wrestling terminology — which appealed to my simple brain. His full analysis is anything but simplistic, though. It speaks to the hard reality companies like Microsoft are facing: Is any of this actually worth it?

Zitron describes the challenges of companies like OpenAI and Anthropic joining SpaceX in going public, describing how the company's financial realities betray the almost demented hype around them.

"They'd be the first to be this bad, other than WeWork, and this is so much worse than that. OpenAI burned $20.9 billion dollars in 2025. The problem with these companies is ... their margins are getting worse. Their costs increase linearly with their revenues. There's no proof they can improve their margins. No amount of specialist silicon will bring these costs down.

"We're at a point where OpenAI is pushing their IPO to 2027 because they couldn't get a trillion-dollar valuation. People are wising up to the problem of generative AI: there's not really a business there."

Zitron posits that none of the hyperscalers and companies like OpenAI and Anthropic "encourage waste," while potentially stealing ideas generated by companies using their models, citing Claude Design and Figma. Indeed, the only public company that seems to be flying on its AI hype right now is Google. I would argue that's less to do with innovating, and more because they've found a way to steal revenue from human creators via Gemini's Google Search summary box — instantaneously creating infinite, dynamic (albeit hallucinating) ad-scaling opportunities.

This wholesale content theft is not as readily available to OpenAI, Anthropic, or Microsoft. Google Search remains the dominant tool for browsing the web, and thanks to Chrome and Android, Google owns the entire stack here.

Microsoft very much does not own the entire stack. It barely owns a stack at all here.

Microsoft's partnership with OpenAI is on the verge of collapse, pending contractual obligations that will expire over the next few years. It's already ditching OpenAI's pricey models in favor of supposedly more-efficient MAI home-grown models in some products. Microsoft Copilot is already barely used, despite being baked into Windows. It languishes at lower than 10% of the market, according to estimates, far behind the likes of Claude, Gemini, and ChatGPT.

CEO Satya Nadella's decision to give up on Windows Phone and internal Android projects has precluded Microsoft from any form of mobile play here. Mobile is where all new consumer tech will thrive, whether or not it's AI or something else. The historical open nature of Windows prevents it from reaching consumers with any of its products. Nobody uses Bing, Edge, or Copilot, and it's a result of Microsoft's wholesale lack of foresight.

Microsoft bet that it could provide the underlying infrastructure instead, and has spent monstrous amounts of CapEx on data centers in the past few years. But Zitron posited in a large report from May that it might be exaggerating, or perhaps even outright lying, about its data center expansion plans. Indeed, there's little evidence that Microsoft has actually expanded its capacity since 2024. Zitron tracked a variety of Microsoft-announced data center projects and found them in various states of incompletion.

Is this a signal that there's no real demand? Is Microsoft intentionally stalling and dragging out construction because it knows there's no actual ROI incoming from these projects?

AI-adjacent stocks, including SpaceX, Oracle, and Microsoft, have all been in near free-fall decline recently, as investors seem to bet that there's gross over-extension going on. Meta is also reportedly spinning up a cloud company to try and offload excess compute it had previously invested in AI specifically, despite not having any actual demand.

"The only reason Big Tech is investing in this is that they've run out of hypergrowth ideas," Zitron said, on the general AI industry. "They don't have a next iPhone, they don't have a new Google Search. They've put over a trillion, with trillions more to come, into a kind of dead-end industry. When that ends, they'll have to admit that they don't have anything else."

"In the future, I see [AI] as a boring hardware-based business, kind of the Oracle licensing hardware model. I think this is a $10 to $30 billion TAM [total addressable market] industry, pretending to be a $1 trillion industry."

"Everyone is just kind of pretending. It's the kayfabe of a tech industry that really has run out of ideas."

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Over the past few years, we've seen generative AI cement its footprint in the workplace and even take over redundant, repetitive tasks entirely. Last year, Anthropic CEO Dario Amodei claimed that AI was on the verge of slashing up to 50% of entry-level white-collar jobs, making it harder for Gen Z to enter the job market.

Even Microsoft's AI CEO, Mustafa Suleyman, recently cleared up the intent of his statement that AI would eliminate white‑collar jobs in less than 18 months. The executive indicated that the statement was blown out of proportion, further clarifying that he meant AI would augment repetitive, mundane tasks — not replace humans.

In 2025, Microsoft co-founder Bill Gates indicated that AI would replace humans for most things. However, the philanthropic billionaire claimed that it'd be mostly up to humans to decide how they interact with the next-gen technology.

The executive previously indicated that biologists, energy workers, and coders would survive the AI revolution, citing that their complex nature constantly requires human intervention.

Incidentally, Gates may have just identified a fourth profession that could be safe from AI replacement — athletes. During an appearance on The Tonight Show with Jimmy Fallon, he suggested that while AI might take over many human tasks, no one would want to watch computers playing baseball (via LADbible Group).

With that in mind, it’s safe to say we’ll continue to savor the moments when our favorite players like Arsenal’s right winger Bukayo Saka grace the pitch with their talent and keep us entertained, even now during the World Cup season.

As AI gains broad adoption and becomes more prevalent, it will undoubtedly reshape how we work or even redefine what the term means. Last year, a study by Microsoft Research highlighted 40 job roles that are at risk of extinction in the age of AI, including customer service representatives, interpreters, technical writers, editors, web developers, and more.

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Microsoft and OpenAI are no strangers in the corridors of justice, particularly when it comes to copyright infringement disputes. It is well established that advanced AI models such as Microsoft Copilot and ChatGPT rely heavily on vast amounts of online content, including material from outlets like Windows Central, for training purposes.

In court proceedings, Microsoft and OpenAI have consistently argued that copyright law does not explicitly prohibit the use of online content to train AI models. However, with Google racing ahead by embedding AI directly into search, the industry finds itself at a tipping point. As traditional outlets struggle to compete, many are shutting down, leaving thousands of experienced journalists in the lurch.

OpenAI CEO Sam Altman has openly acknowledged that building tools like ChatGPT would be virtually impossible without relying on copyrighted material. That admission now looms large as a coalition of publishers, representing nearly 400 newspapers, has filed a lawsuit against Microsoft and OpenAI in the U.S. District Court for the Southern District of New York, accusing them of copyright infringement (via Bloomberg).

The complaint indicates that the two companies are unlawfully using their content to develop and train the AI chatbots without consent or compensation. According to the complaint:

"Defendants systematically and secretly crawled the Publishers’ websites—including content behind paywalls and other access restrictions—and copied the Publishers’ articles, stories, and other original works onto their own servers without authorization."

The publishers argue that the companies have generated billions from stealing their work and have not paid a dime for it. They are now seeking statutory damages and injunctive relief, citing copyright infringement and violations of the Digital Millennium Copyright Act.

Speaking to Bloomberg, OpenAI spokesperson Drew Pusateri indicated:

“Our models empower innovation, are trained on publicly available data, and are grounded in fair use."

“It would be inequitable if at the end of this you have a resolution that only benefits the largest players in the marketplace and not the people who are doing hard work reporting on things that frankly very few outlets still cover in America today,” former New Jersey Attorney General Matthew Platkin added.

The publishers argue that the AI revolution could be a "death knell for local journalism" if these AI firms aren't held accountable and continue to steal content without compensation.

Elsewhere, a separate 2024 report suggests that AI companies, including Anthropic, Google, and OpenAI, had hit a wall due to a lack of high-quality content for training, which prevented them from developing advanced AI models.

This opens up a broader discussion about the future of AI models if Google is hell-bent on integrating AI into search, after it has practically run every publication into the ground.

The dead internet theory, in particular, comes to mind. It suggests that prolonged exposure of large language models to low-quality training data negatively impacts accuracy, comprehension, and thought process. What's worse is that the phenomenon could only be less than 3 years away if recent studies are anything to go by.

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Microsoft CEO Satya Nadella warned that AI must demonstrate real‑world value or risk losing public support. His comments came amid mounting community backlash over the technology’s heavy demand for electricity and cooling water to power data centers, although Microsoft and NVIDIA have seemingly found a fix.

Speaking to The Wall Street Journal recently, Nadella echoed his earlier stance, stressing that leading players in the AI industry must advance the technology in ways that deliver the greatest public benefit.

There’s growing concern around AI, particularly when it comes to security, privacy, and even its impact on jobs. "You can't say, hey, all white-collar jobs are gone and this could even be a weapon, and we will use all the power to build data centers," Microsoft CEO Satya Nadella noted.

Perhaps more interestingly, the executive called out key investors in the AI landscape who see the technology primarily as a tool to cut jobs and reduce operational costs. He indicated that this would be the wrong way to look at the technology.

Instead, he recommended that AI should be viewed as a tool designed to help skilled workers better leverage their capabilities. He further painted a picture where AI tools and human capital co-exist in the same space, a phenomenon he referred to as "token capital."

While the executive claimed that it'd be a recipe for how companies can leverage both AI and workers simultaneously, he admitted that: "it's a lot of change management, it's a lot of displacement, but there is a path."

Nadella indicated that leveraging AI and humans at the same time at work can create a "continuous learning system." He indicated that companies in the future could be characterized by the "tacit knowledge that they contain from both sources."

The executive acknowledged that the idea might face public resistance but emphasized that it would be up to corporations to convince people of the economic opportunities AI could unlock in the future.

Over the past few years, key investors and leaders in the AI landscape have shared several theories, highlighting how the technology could reshape work. Last year, Anthropic CEO Dario Amodei claimed that AI was on the verge of slashing up to 50% of entry-level white-collar jobs, making it harder for the next generation to enter the job market.

Interestingly, Microsoft's AI CEO, Mustafa Suleyman, recently cleared up the intent of his statement that AI would eliminate white‑collar jobs in less than 18 months.

The executive indicated that his statement was widely misconstrued. Rather than replacing humans entirely from work, he indicated that AI would be used to augment repetitive and mundane tasks.

At the same time, Microsoft CEO Satya Nadella wants AI agents to be treated like human employees. It'll be interesting to see how AI is adopted in the workplace, and whether organizations choose to view the technology as a supplement rather than a replacement for the workforce.

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Generative AI has made a significant impact across education, computing, medicine, entertainment, and more. However, all that progress comes with a hefty price tag. The amount of electricity these systems burn through, plus the insane amounts of water needed to keep them cool, is honestly outrageous.

For context, Microsoft and Google's electricity consumption in 2024 surpassed the power usage of over 100 countries. Similarly, OpenAI's GPT-4 AI model consumes up to 3 water bottles to generate 100 words.

Earlier this month, Microsoft shared an interesting concept that may potentially address the water concerns riddling the progression and advancement of AI. CEO Satya Nadella revealed that the tech giant uses a liquid loop in its data centers, which is filled once. As a result, the company's data centers' water consumption has reduced significantly, down to "what a single restaurant would use."

And now it looks like NVIDIA is taking a page from Microsoft’s playbook. Speaking at London Climate Week on Monday, a top executive suggested that water concerns tied to data center development could be addressed through the company's next-generation AI infrastructure.

The executive further disclosed that the company's new next-gen AI infrastructure can be fully cooled with a liquid warm enough to alleviate the need for additional chilling equipment (Axios).

According to NVIDIA's Chief Sustainability Officer, Josh Parker:

"The water consumption challenge for data centers is largely solved."

How does this liquid work? It’s basically a recirculated mix of water and propylene — think automotive antifreeze. It’s worth noting that the system can operate at temperatures up to 113 degrees Fahrenheit.

As such, this allows it to function reliably in hotter environments compared to older systems. In practical terms, data centers equipped with NVIDIA’s next-generation AI infrastructure will require significantly less water and energy for cooling, reducing both operational costs and environmental impact.

This announcement comes at a time when concerns over water and energy use are mounting, as data centers continue to expand into community corridors. Microsoft has seemingly embraced the "Community-First" AI infrastructure, which addresses some of the issues raised by communities themselves, including reducing its water consumption and promising not to increase electricity bills.

Elsewhere, Microsoft’s plan to build a $1 billion data center in Kenya came to an abrupt halt in early May after the government declined to commit to covering the annual capacity costs Microsoft had requested to run Azure in the region. President William Ruto remarked that the facility’s power demands would be so immense that it would effectively require “switching off half the country” to keep it operational.

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