Microsoft Stock Ticks Up as OpenAI Deals Keep Azure on Track

This article first appeared on GuruFocus.

Microsoft (NASDAQ:MSFT) edged up 0.5% on Tuesday after the company provided an update on its AI initiatives and capital spending during discussions with BNP Paribas.

The software giant reiterated its strong relationship with OpenAI, describing the AI firm as a substantial and reliable Azure customer. Despite recent reports of OpenAI lowering its long-term spending forecast, Microsoft said components of the roughly $250 billion contract are progressing on schedule, with near-term supply constraints limiting incremental Azure contributions.

On competition, Microsoft noted Anthropic’s rapid revenue growth, but highlighted that its own tools, data controls, permissioning, and observability via Microsoft 365, support enterprise scalability. Analyst Stefan Slowinski said Microsoft’s user base of over 450 million Microsoft 365 and 15 million Copilot users provides a competitive edge, comparable to Google’s position amid the rise of ChatGPT.

Regarding capital expenditures, Microsoft suggested that AI-driven spending is early-stage and may moderate over time, potentially offering investors insight on FY2027 capex in the April report. The company also noted that Azure AI margins are already above earlier cloud-stage levels, likely adding to overall profitability rather than diluting margins.