Microsoft's Azure Pricing Power Unleashed Gradually
Microsoft's Azure cloud division has another growth lever waiting in the wings, according to BNP Paribas analysts who met with Microsoft leadership. The analysts believe that higher cloud prices will feed into results only as existing customer contracts come up for renewal.
Stefan Slowinski, an analyst at BNP Paribas, reiterated a Buy rating on Microsoft stock with a $549 price target following the discussions. This implies roughly 11% upside from Microsoft's Sept. 18 close of $493.80.
The company has no intention of tearing up existing agreements and will instead reset pricing upon renewal. This means any Azure pricing benefit will flow through gradually rather than providing a meaningful step-up in Azure growth in the near term, according to Slowinski.