Investors have until August 11 to join a fraud lawsuit accusing Microsoft of hiding problems in Copilot, its flagship AI product. The case targets those who bought Microsoft shares between May 1, 2025 and January 28, 2026.
The timing is striking. Just days ago, Microsoft posted a record one-day market value jump, driven mainly by the same AI tech that’s under scrutiny in the lawsuit. On January 28, Microsoft announced fiscal Q2 results showing revenue up 17% to $81.3 billion, with Azure cloud growing 39%. But investors focused on the sharp rise in capital spending and a Copilot subscriber count of just over 15 million.
The complaint alleges Microsoft overstated Copilot’s value and Azure’s growth, pointing to confusing branding and underperforming tools. This triggered a stock drop from $481.63 to $433.50 the very next day, wiping out about 10% of its value.
Similar lawsuits have followed other big tech AI disappointments this year, reflecting growing investor wariness around AI spending.
Yet Microsoft bounced back hard. By its fiscal Q4 earnings, revenue hit $90 billion, Azure growth jumped to 43%, and Copilot seats doubled to over 30 million. Shares surged 16% in one day, adding roughly $450 billion in market cap an unprecedented single-day gain for any US company. CEO Satya Nadella highlighted this milestone, noting Azure revenue surpassed $100 billion and Copilot’s user base exceeded 30 million paid seats.
Despite the rebound, the stock price on Friday was still about 4% below its January 27 peak. Investors who suffered losses then now face the question: will they recover their money? Most legal experts say the chances are slim, with any payouts likely years away and small in amount.
This material is for informational purposes only and does not constitute financial advice.
