In the big-spending history of technology, theres never been a time like this, when so many companies are spending so many hundreds of billions of dollars on a still-to-be proven technology generative AI.Microsoft, Amazon, Meta and Google are expected tospend a combined $364 billion in their 2025 fiscal yearsalone. (Microsoft plans tospend $80 billion in AI capital expenditures.)Thats just the tip of the iceberg. It doesnt take into account spending by chip manufacturers like Nvidia and Intel, or by genAI startups like Anthropic, OpenAI and all the rest. And it doesnt take into account how much enterprises spend on the technology.Lost in all of this is an unthinkable thought: What if genAI cant offer the benefits its backers claim? What if its the biggest bust in a long line of tech busts?Microsoft, the largest and most valuable AI company in the world, has more to lose than any company if all the promises turn out to be illusory or overhyped. And theres increasing evidence that might just be the case. From McKinsey to Gartner to MIT and beyond, analysts and researchers are saying the quiet part out loud: There may be more hype than reality to the genAI boom.Heres what theyre saying and what it could mean for the future of Microsoft if theyre right.Researchers: Most companies say using AI has been a bustMicrosoft and other AI companies are bullish on the technology for a simple reason: Enterprises are betting big on it, spending tens of billions annually, and at an accelerating pace. IDC says enterprises willspend $61.9 billion this year on genAI alone, which doesnt take intoaccount all the other forms of AI. That $61.9 billion is nearly double the enterprise genAI spending from a year ago, the firm says.As enterprises are spending more, theyre finding that their investments arent paying off.A recent McKinsey report found that nearly eight in 10 companies report using gen AI yet just as many report no significant bottom-line impact. Think of it as the genAI paradox.McKinsey isnt alone.An MIT report,The GenAI Divide: State of AI in Business 2025has even more disturbing news: 95% of genAI pilots in businesses are failing.A survey by the data and analytics firm S & P Globaladds that 42% of companies abandoned most of their AI pilots by the end of 2024, up 17% from the previous year.Gartner has documented the booms and busts of new technologies for decades by tracking what it calls their hype cycles. The company has been tracking AIs hype cycle and warns, last years Hype Cycle for AI highlighted genAI as a potentially transformational technology with profound business impacts. This year, genAI enters the Trough of Disillusionment. The researcher also found that, Despite an average spend of $1.9 million on genAI initiatives in 2024, less than 30% of AI leaders reporttheir CEOs are happy with AI investment return investment return.What this means for MicrosoftMicrosoft became a $3 trillion company based on its investments in AI. So, if businesses continue to find little value in AI projects, the companys financial future will be endangered.But theres a silver lining to the glum findings by McKinsey, S & P Global, Gartner and the rest. They all conclude the same thing: enterprises have been unhappy with their AI investments because they havent yet found out how best to use the technology. Once they do, AI spending can bring significant benefits.For example, the MIT study found that when companies turn to outside experts and firms for their projects, they succeed 67% of the time. But when they build them internally, they succeed only 33% of the time.McKinsey found that using AI agents specifically crafted to an enterprises workflow can offer tremendous benefits. It claims that the shift to agents enables far more than efficiency. Agents supercharge operational agility and create new revenue opportunities.And chief Gartner forecaster John-David Lovelock toldThe New York Timesthat when AI leaves behind the Trough of Disillusionment phase of its life cycle, it will become a highly useful productivity tool.Microsoft is well aware of all that. At its 2025Build developers conference,execs proclaimed,Weve entered the era of AI agentsand made a host ofannouncements aboutits plans to help companies build agents using Copilotand its plans to build what it calls the agentic web.Microsoft alsooffers a guide to best practices for using Copilot in enterprises, including one titled,How to deploy transformational enterprise-wide agents: Microsoft as Customer Zero.The upshotNone of the bad news about AI should be a surprise. Its always been unclear at first whether a new technology will take off or fail. The current high rate of abandonment looks bad on the surface, but could be interpreted as a good sign it shows companiesarewilling to experiment.Its still too early to know whether genAI will crash and burn like the metaverse did or transform business and the way we live as the Internet did. Microsofts fate depends on which way it goes.