Two-thirds of the companies in the S&P 500, an index of 500 of the largest US public companies, discussed AI on their earnings calls last quarter. Only 1 in 4 gave investors a measurable result. Microsoft’s annual report shows what happens to those results when a company files with the SEC.
How many large US companies report a measurable AI result
Every quarter, a public company’s executives review its financial results with investors on an earnings call. FactSet, a financial data company, searched last quarter’s S&P 500 earnings calls for the term ‘AI’ and found it on 67% of those calls.
Morgan Stanley went a little deeper with its analysis, counting the companies that cited at least one measurable benefit from AI on their earnings calls and at investor conferences. They found that only 24% of S&P 500 companies did. That means roughly three-quarters of these companies gave investors no measurable benefit from adopting AI.
Morgan Stanley’s definition of a measurable benefit is generous. It includes a bank that told investors it had 117 AI solutions running. The bank attached no revenue or savings to that count. Even with such a broad definition, only 24% of S&P 500 companies qualified.
That 24% reflects what executives chose to tell investors. A company in the other 76% could still be benefiting from AI without having reported a figure.
Microsoft is one of the companies that reports AI figures to investors. I compared what its executives said on earnings calls with the annual report it filed.
What Microsoft told investors about Copilot
On July 29, Microsoft CEO Satya Nadella told investors on the company’s earnings call, ‘we now have over 30 million paid Microsoft 365 Copilot seats.’ Copilot is the AI assistant Microsoft sells inside Word, Excel, and Outlook. A seat is one paid license for one person.
Microsoft filed its annual report with the Securities and Exchange Commission (SEC) that same day. The SEC is the US agency that regulates public companies. The annual report is the yearly document in which a company reports its finances, risks, and each division’s results. I searched Microsoft’s report for ‘30 million’ and for any count of Copilot seats. Neither search returned a Copilot figure.
The phrase ‘Copilot seat’ appears once in the report. Microsoft wrote, ‘Cost of revenue increased $2.6 billion or 12% driven by investments in AI infrastructure to support Microsoft 365 Copilot seat and usage growth.’ Cost of revenue is what a company spends to deliver the products it sells.
On the call, Microsoft told investors how many Copilot seats it has. In its annual report, Microsoft reported what those seats cost to grow.
That matters because ‘30 million seats’ is the kind of figure people repeat as proof that AI is paying off at large companies. A company answers for a figure differently depending on the document it’s in.
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Three documents where a company reports AI results
To compare Microsoft’s statements with its annual report, I sorted each AI figure by the document it appeared in. I used three groups. Here’s what each means:
Said. An executive stated the figure on an earnings call.
Furnished. The figure is in the press release a company publishes on the day of its earnings call to announce that quarter’s financial results. The company sends that press release to the SEC, so it becomes part of the public record. Under SEC rules, it doesn’t count as a filed document, so the company faces less legal liability than with its annual report.
Filed. The figure is in the company’s annual report, the 10-K. Before filing, the company has an outside accounting firm audit its financial statements. The firm’s audit report is published inside the 10-K.
Microsoft’s AI claims compared with its annual report
On its April and July earnings calls this year, Microsoft’s CEO gave investors three AI figures. I looked for each one in Microsoft’s press releases and in its 10-K.
30 million paid Copilot seats (Furnished). Nadella stated it on the July call. Microsoft’s July press release includes it too. The 10-K has no Copilot seat count. Microsoft reports there that Microsoft 365 Commercial seats grew 6%, a figure for the product family that includes Copilot. Microsoft credits Copilot for revenue growth in one sentence of the 10-K. That sentence shares the credit with a second product and gives no dollar amount.
$37 billion AI revenue run rate (Furnished). On the April call and in the April press release, Nadella said, ‘Our AI business surpassed an annual revenue run rate of $37 billion.’ A run rate estimates a full year of revenue from a recent shorter period. If a business earned $1 billion last month, its annual run rate is $12 billion. The phrase ‘run rate’ doesn’t appear in the 10-K.
For Intelligent Cloud, the division that includes its Azure cloud business, Microsoft reports that revenue rose $31.5 billion, or 30%, and cost of revenue rose $17.7 billion, or 44%. Microsoft attributes the cost increase to ‘investments in AI infrastructure’. It attributes the Azure revenue growth to ‘demand for services across the platform’ and gives no AI share.
43 minutes saved per day (Said). On the July call, Nadella said a trial at NHS England, the public health service, showed Copilot ‘saved employees an average of 43 minutes per day.’ The July press release doesn’t include it. I wouldn’t expect a customer’s trial result in an annual report. This figure is the only one of the three that measures what Copilot does for the people who use it. Microsoft gave it on the call alone.
Microsoft’s 10-K attributes two cost increases to AI, $2.6 billion in the division that sells Copilot and $17.7 billion in Intelligent Cloud. The Copilot seat count and the $37 billion AI revenue run rate appear in Microsoft’s press releases. Neither one appears in the 10-K.
Both divisions earned more than those cost increases. Operating income rose $14.1 billion in the division that sells Copilot and $12.4 billion in Intelligent Cloud. Microsoft’s 10-K doesn’t say how much of either increase came from AI.
Why Microsoft’s annual report includes OpenAI revenue and no Copilot seat count
Microsoft’s 10-K does include one AI revenue figure. Microsoft recorded $24.1 billion in revenue from OpenAI in fiscal 2026, which covers only its business with OpenAI.
Microsoft owns roughly a 25% stake in OpenAI. US accounting standards treat a business with that level of ownership as a related party and require a company to disclose transactions with related parties.
That figure is in the 10-K because a rule requires it. No rule requires Microsoft to file its Copilot seat count or its AI revenue run rate. Microsoft didn’t file them.
The SEC doesn’t require companies to report the revenue or savings they attribute to AI. Its general standard requires a company to disclose a trend that management knows about and that’s ‘reasonably likely to have material effects’ on its finances. Material means large enough to affect an investor’s decision. Company management decides whether a trend meets that standard.
When the SEC has addressed AI directly, it has focused on honesty. Its former chair, Gary Gensler, commented on AI washing and said companies that discuss AI ‘should say what they’re doing, and do what they’re saying.’
What Microsoft’s filing tells you about corporate AI claims
Microsoft broke no rules by leaving the Copilot seat count out of its 10-K. It filed what its AI growth cost. It kept the size of that growth in a press release and on a call.
About 3/4 of S&P 500 companies gave investors no measurable AI results on their calls last quarter. Microsoft is one of the S&P 500 companies that gives investors AI results. Microsoft put none of the three results I checked in its 10-K.
The case that AI is paying off at large companies currently rests on what executives choose to say on earnings calls. Microsoft’s filed annual report includes the spending it attributes to AI and no figure for what that spending returned.
Which company’s AI claims should I compare with its annual report next?
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