Microsoft will unveil a suite of homegrown AI models at its Build developer conference in San Francisco next week, including a coding model designed to boost GitHub Copilot, The Information reported Thursday. The lineup extends beyond coding. Microsoft is also preparing models for transcription, reasoning, speech, and image generation, according to a person with direct knowledge of the plans cited by Reuters. The company declined to comment.
Shares rose nearly 3% on the news. The move marks an escalation in Microsoft's effort to build its own AI capabilities independent of OpenAI, a partnership that has frayed in recent months. The companies renegotiated their deal terms in April, loosening restrictions that had prevented Microsoft's internal AI team, led by AI chief Mustafa Suleyman, from training top-tier models.
GitHub Copilot, once the dominant AI coding assistant, has lost ground to Anthropic's Claude Code, which has become the preferred tool for many developers. Microsoft itself allowed thousands of employees to use Claude Code internally over the past several months, according to multiple reports. The company is now reportedly planning to phase out internal Claude Code usage by the end of June and push teams toward its own Copilot-based command line tools. The shift is partly financial. Reducing reliance on third-party AI models from OpenAI, Anthropic, and Google could lower operating expenses as Microsoft enters its next fiscal year. But it also gives the company more control over its AI roadmap.
Microsoft has been exploring AI startup acquisitions to bring in talent and accelerate its goal of building a cutting-edge model by next year, Reuters reported earlier this month. The company's quarterly capex is on track to exceed $40 billion, with $190 billion planned for calendar 2026.
Investor sentiment on Microsoft has soured this year, with the stock down about 15.7% year to date as questions mount about the viability of its early AI lead. Rivals Google and Amazon have reported strong progress in their own AI efforts.
Microsoft's AI revenue hit an annual run rate of $37 billion, up 123%, and Azure grew 40% in its fiscal third quarter. But the spending required to sustain that growth has spooked Wall Street.
Microsoft's ability to ship a competitive in-house coding model will be the clearest signal yet of whether it can stand on its own AI feet.
