Bank France and Pakistan gave Microsoft (MSFT.US) a “buy” rating: Azure's price increase will gradually be implemented as the contract is renewed, or the deal with SpaceX will be announced soon

The Zhitong Finance App learned that the investment agency BNP Paribas said on Monday that after meeting with Microsoft (MSFT.US) executives, it believes that Microsoft still has room to raise Azure prices in the long run. BNP Paribas analyst Stefan Słowinski said Microsoft executives acknowledged that Azure prices are rising, but added that the company will not tear up existing contracts and will only raise prices after the contract expires. Słowinski rated Microsoft as a buy, with a target price of $549.

“Instead, pricing will be reset upon renewal, which means any Azure pricing bonuses will gradually be incorporated into performance rather than a substantial step-up in Azure growth in the short term.” In a report to customers, Słowinski wrote, “Importantly, Microsoft also reiterated that its recent strength in Azure is not driven by pricing, and that fleet-level efficiency improvements and continued production capacity climbing are still the most important growth drivers. This is reassuring — Azure's growth rate accelerated to mid-40%, before Microsoft saw any real impact on pricing.”

In addition to pricing, Słowinski also pointed out that Microsoft is “fighting back” against recent reports that the company plans to increase data center capacity to 38 gigawatts by 2032.

The topic of a potential cloud computing deal with SpaceX (SPCX.US) was also mentioned, in part due to Nebius (NBIS.US) CEO Arkady Voloz's recent statement, which hinted at the existence of such a deal. (SpaceX recently revealed that it has signed a new computing power customer and is expected to spend around $1 billion a month starting in December.)

“In response, the company declined to comment on any particular vendor, but reiterated that it is still looking for incremental computing power because the company is still in a catch-up mode. Microsoft also acknowledged that in the current environment, it is very difficult to find immediate access to recent production capacity, especially infrastructure that meets Microsoft's specifications.” Słowinski added, “So while there is no confirmation of the SpaceX relationship, we wouldn't be surprised if future announcements are possible.”

Additionally, Microsoft executives provided further details of the agreement with OpenAI. Słowinski said the tech giant confirmed a revenue share cap of $38 billion, but OpenAI's revenue share was not a source of its recent Azure performance exceeding expectations, “and indicates that if it becomes an important driver of the upside, the company will clearly identify this contribution.”