Microsoft Corp (NASDAQ:MSFT) is rolling out major upgrades to Microsoft 365 and preparing broad price hikes for 2026 as it doubles down on helping organizations navigate an artificial intelligence-driven workplace.
Today, hundreds of millions of people use Microsoft 365 apps, and most major companies already rely on its AI assistant, Copilot.
Because workplaces are facing more security threats, heavier technology demands, and growing pressure to adopt AI responsibly, Microsoft is expanding the capabilities of Microsoft 365 in 2026.
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At the same time, the company will introduce new pricing, similar to tariff adjustments, for commercial and government customers starting July 1, 2026. Microsoft says it is announcing these changes well in advance so organizations can plan ahead.
New Intelligent Features Across Microsoft 365 Apps
To make Microsoft 365 more useful in an AI-driven workplace, the company is adding more intelligent features across Word, Excel, PowerPoint, Outlook, and OneNote.
The company is also giving IT teams stronger tools to manage how employees use AI, ensuring workplaces can adopt new technology confidently and safely.
Microsoft is widening its security protections as well.
On the IT side, Microsoft is adding features that will help tech teams diagnose device issues quickly, prevent problems before they happen, and manage apps more easily.
Higher-end plans, such as Microsoft 365 E5, will also receive tools that control who can access sensitive information and keep AI use within safe boundaries.
2026 Price Increases Across Plans
Alongside these upgrades, Microsoft will raise prices for its commercial and government subscriptions. The company says these increases reflect the scale of its recent investments, including more than 1,100 new features released across Microsoft 365, Security, Copilot, and SharePoint in the past year.
Under the new pricing, Microsoft 365 Business Basic will increase from $6 to $7 per person per month, and Business Standard from $12.50 to $14. Business Premium remains at $22.
The entry-level Office 365 E1 stays at $10, while Office 365 E3 will rise from $23 to $26. Microsoft 365 E3 will increase from $36 to $39, and Microsoft 365 E5 will move from $57 to $60.
Prices for frontline worker plans are also going up: Microsoft 365 F1 rises from $2.25 to $3, and Microsoft 365 F3 increases from $8 to $10. Government organizations, including the U.S. Defense Department, will face similar percentage increases.
Microsoft Responds To Reports On AI Sales Targets
Also this week, Microsoft pushed back against reports claiming it lowered sales growth targets for certain AI products.
The company told Reuters that the Information misrepresented how its sales quotas work and stressed that it has not cut overall AI quotas, helping the stock recover from early losses.
Microsoft shares had slipped on Wednesday after reports said it reduced sales targets for some AI software because customers remain cautious about adopting the tools. Azure sales staff reportedly viewed the changes as unusual.
Meanwhile, Microsoft is investigating a bug that has prevented customers from downloading Microsoft 365 desktop apps from the homepage since November 2.
The company traced the problem to a service update that disrupted license checks and is testing a fix before rolling it out.
A separate update is also in progress for issues affecting Excel attachments in the new Outlook client and other Microsoft 365 installation problems.
The $3.6 trillion Big Tech giant gained over 14% year-to-date, lagging the NASDAQ Composite Index’s 22% returns.
MSFT Price Action: Microsoft shares were up 0.14% at $481.50 during premarket trading on Friday, according to Benzinga Pro data.
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