Xbox pulls plug on Copilot, so why is Microsoft stock surging?

Microsoft shares rose after Xbox chief Asha Sharma announced the winding down of Xbox Copilot on mobile and cancellation of planned console deployment. Investors interpreted the move as a sign of stronger cost and product discipline — cutting a non-core, low-demand AI feature before it reached hardware — rather than a retreat from Microsoft’s broader AI strategy. The market is rewarding the perceived reduction in waste and faster decision-making, while Microsoft’s main AI revenue story remains intact: Microsoft 365 Copilot reported 20 million paid seats (up from 15 million in January) and has secured enterprise rollouts such as Accenture. The piece recommends buying MSFT and selling game publishers pushing AI-heavy features (e.g., EA). Key risks include rising AI spending and slower enterprise Copilot growth, which could make the cut look like an isolated cost-saving rather than sustained discipline.