This article first appeared on GuruFocus.
Microsoft (NASDAQ:MSFT) could have more Azure upside than investors expect, with BNP Paribas pointing to Google’s recent SpaceX cloud deal as another sign that AI infrastructure demand remains tight.
BNP analyst Stefan Slowinski said Google’s (NASDAQ:GOOG) agreement to pay SpaceX about $920 million a month shows how strong demand is in a supply constrained market. While the deal may be short duration, he said it still supports the idea that AI infrastructure demand remains robust for now. If pricing improves when cloud contracts renew, Slowinski believes Azure growth could move higher into the mid 40% range.
The key question is whether Microsoft can keep the Azure efficiency gains that have helped the cloud unit beat investor expectations in recent quarters. Slowinski also flagged the possibility of Azure price increases as AI contracts renew, especially with memory, CPUs and other parts of the tech stack getting more expensive.
BNP kept a Buy rating and $555 target on Microsoft. The firm also said Copilot feedback is improving, though enterprise rollout cycles remain slow.
