Microsoft Corp. (MSFT) could see additional upside from Azure pricing over time, even as recent cloud growth has largely been driven by capacity expansion and efficiency gains, according to BNP Paribas Equity Research.
Analyst Stefan Slowinski reiterated a positive view on Microsoft with a $549 price target, implying about 11% upside from the stock's Sept. 18 closing price of $493.80.
BNP Paribas spoke with Microsoft Investor Relations ahead of the company's fiscal first-quarter 2027 quiet period. Microsoft did not change its guidance or provide an intra-quarter update.
Azure Pricing Benefits Could Build Gradually
Slowinski said GPU rental pricing has become one of the biggest topics in recent investor discussions.
Microsoft acknowledged that Azure pricing is moving higher. However, the company does not plan to alter existing contract economics. Instead, new pricing would take effect as contracts renew.
That means pricing benefits are likely to flow into Azure revenue gradually rather than trigger an immediate jump in growth, the analyst said.
Importantly, Microsoft indicated that recent Azure strength has not been driven by pricing. Instead, fleet efficiency improvements and additional capacity remain the main growth drivers.
BNP Paribas called that encouraging because Azure growth has already accelerated into the mid-40% range before any significant pricing impact.
Microsoft Still Hunting For AI Capacity
The company also pushed back on a Bloomberg report suggesting it plans to scale computing capacity to 38 gigawatts by 2032, although it did not provide its own target.
It declined to address speculation that it may have sourced capacity from SpaceX. However, Microsoft reiterated that it continues to seek additional compute capacity as demand remains ahead of supply.
Slowinski said near-term access to infrastructure that meets Microsoft's specifications remains difficult.
OpenAI Economics Remain In Focus
Microsoft also confirmed that a cumulative cap exists on its revenue-sharing arrangement with OpenAI, although it did not disclose the amount.
The Information previously reported a $38 billion cap. BNP Paribas estimates that level could allow revenue sharing to continue through early fiscal 2029 if OpenAI tracks toward reported long-term revenue targets.
Microsoft said OpenAI revenue sharing has not been a meaningful source of Azure outperformance in recent quarters. The company also said it would disclose the contribution if it became material.
Meanwhile, the company reiterated that its recent segment restructuring reflects how the company increasingly manages its businesses internally. It also maintained its expectation for Microsoft 365 growth to accelerate through fiscal 2027.
Microsoft carries a Buy consensus rating and an average price forecast of $563.04.
Cantor Fitzgerald maintained an Overweight rating Monday and raised its target to $608. Citizens maintained a Market Outperform rating with a $550 target on Sept. 15. Stifel maintained a Hold rating and raised its target to $530 on Sept. 4.
Microsoft Stock Performance And Technical Analysis
Microsoft stock traded higher Monday as a broad technology rally lifted large-cap stocks.
The stock remains above its 50-day SMA of $466.92, 100-day SMA of $435.27 and 200-day SMA of $431.64.
However, the stock trades slightly below its 20-day SMA of $498.20. MACD is also below its signal line, pointing to softer near-term momentum.
Resistance sits near $513.50, while support is around $486.
Price Action
Microsoft shares were up 0.54% at $496.44 at the time of publication Monday, according to market data.
