Microsoft Eyes Strong AI Growth with Copilot and OpenAI Revenue

Microsoft Corp. (NASDAQ:MSFT) is positioning itself for strong AI-driven growth in fiscal 2027, with multiple revenue streams expected to boost its financial performance. BNP Paribas analyst Stefan Slowinski highlighted the company’s potential for a second layer of AI monetization beyond infrastructure demand, citing OpenAI revenue share and consumption-based pricing for Microsoft 365 Copilot as key growth drivers.

Slowinski noted that OpenAI is approaching nearly $70 billion in annual recurring revenue by the end of Microsoft’s fiscal first quarter of 2027. He forecasted Azure growth reaching up to 46% in constant currency during the fiscal first quarter and potentially approaching 50% in the fiscal second quarter. The analyst also anticipates accelerating revenue growth while maintaining positive free cash flow ahead of Microsoft’s upcoming earnings report.

GitHub Copilot’s success with consumption-based billing has set a precedent for similar pricing models in Microsoft 365 Copilot. BNP Paribas estimates that Copilot consumption could add about one percentage point of incremental growth to Microsoft 365 Commercial Cloud by the fiscal fourth quarter. This could lead to Azure growth exceeding expectations and stronger fiscal second-quarter guidance, while also supporting Microsoft 365 Commercial Cloud.

CNBC’s Jim Cramer identified Microsoft as one of the leading AI companies helping to offset the impact of rising interest rates. He pointed to improving sentiment around Copilot as a key catalyst for the tech giant. Microsoft’s Ignite conference, scheduled for November 17, is expected to be another potential catalyst, with CEO Satya Nadella addressing investors for the first time in many years.

BNP Paribas maintained its Outperform rating on Microsoft and raised its price forecast to $604 from $549, suggesting about 15% upside from the stock’s October 5 price of $525.20. The analyst also increased fiscal 2027 revenue and earnings-per-share estimates by 1% to 2%, modeling Azure growth of 46% in the fiscal first quarter and 49% in the fiscal second quarter. The higher price forecast is primarily driven by a sector re-rating, according to Slowinski.