Tech giant Microsoft (MSFT) is facing one of its clearest AI tests through GitHub, the developer platform it bought in 2018 for $7.5 billion, according to The Information. GitHub benefited early from the AI coding boom because GitHub Copilot launched in 2021 using OpenAI technology, long before ChatGPT made generative AI mainstream. However, that early lead is now under pressure from newer tools like OpenAI’s Codex, which can handle more advanced coding work than basic autocomplete.
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Therefore, Jay Parikh, who oversees the Microsoft division that includes GitHub, has reportedly warned that if GitHub does not adapt, rivals could threaten not only Copilot but the core code repository itself. That threat is pushing Microsoft to rethink GitHub’s strategy. The company is working on its own AI coding models to reduce dependence on OpenAI and Anthropic by using coding data from Microsoft employees and GitHub customers to help train those systems. Microsoft has also explored acquiring AI coding startups and previously considered buying Cursor, but backed out due to EU antitrust concerns.
GitHub Copilot Is Still Growing
However, it is important to note that GitHub Copilot is still growing, with paid users rising from just over 1 million in early 2024 to more than 4.7 million in December 2025, while GitHub’s annual recurring revenue topped $3 billion at the end of 2025. Nevertheless, the growth has brought new problems. GitHub traffic has surged 14 times over the past year as customers use AI tools to upload and edit more code, but much of that activity does not directly generate revenue.
As a result, this has pressured margins, caused more outages, and frustrated major customers, which has led some users to start looking at alternatives like GitLab (GTLB). In addition, Microsoft is now planning to raise GitHub Copilot prices through usage-based billing, but that could push some customers toward rival tools.
What Is the Price Target for Microsoft?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 33 Buys and two Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average MSFT price target of $559.98 per share implies 33.3% upside potential.
