Microsoft Azure Still Poised To Crush Estimates Despite $150 Billion Spending Fears: Analyst

BNP Paribas analyst Stefan Slowinski said Microsoft Corp (NASDAQ:MSFT) faces a complex setup in its fiscal third-quarter results, balancing strong cloud growth with investor concerns around AI capacity allocation and spending.

GPU Allocation And Copilot In Focus

Slowinski said on Thursday that investors are increasingly scrutinizing how Microsoft allocates constrained GPU capacity across internal initiatives and external customers, including AI model development.

He added that management may offer updates on Copilot adoption and upcoming feature improvements to address these concerns, especially as competitors like Anthropic scale rapidly.

Azure Growth Holds Up Amid Mixed Signals

Slowinski projected Azure growth of about 39% in constant currency for the fiscal third quarter, slightly above consensus, alongside mid-teens growth for Microsoft 365 Commercial Cloud.

He noted that reseller survey data showed slightly softer performance than earlier in the year, though it was still stronger than most peers’.

He flagged a potential pull-forward in Windows revenue driven by higher memory costs.

Lower Price Target On Higher Capex Outlook

Slowinski cut his price forecast to $556 from $659 while maintaining an Outperform rating, reflecting a broader software valuation reset.

He said updated assumptions include a higher share of capacity allocated to first-party workloads and increased capital expenditures, with spending expected to reach around $150 billion in fiscal 2027.

Technical Analysis

At $370.22, ...

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