Nadella's 'Code Red' Copilot Overhaul Targets Revival Amid 17% Microsoft Slump

Microsoft CEO Satya Nadella is leading a 'Code Red' overhaul of Copilot, introducing features like Agent Mode, Copilot Cowork, and Microsoft 365 E7 to boost adoption among 450 million subscribers. Shares have fallen over 17% in six months, marking the worst quarter since 2008, due to weak AI monetization despite 15 million paid Copilot seats and 4.7 million GitHub Copilot users (up 75% YoY). BNP Paribas analysts see potential in 20% free cash flow margins and Azure growth, but tangible traction is needed for sentiment to shift positively.