Microsoft's Azure revenue grew 43% in Q4, fueled by AI demand and OpenAI partnerships, according to BNP Paribas analyst Stefan Slowinski. The company's stock rose 2.54% following the earnings report.
TL;DR
- Microsoft's Azure revenue grew 43% in Q4, driven by AI demand and OpenAI partnerships.
- BNP Paribas analyst Stefan Slowinski raised Azure growth estimates to 44% for fiscal 2027.
- Microsoft's stock rose 2.54% following the earnings report.
What happened
Microsoft reported a 14th straight quarter of 'double beat' earnings, with Q4 revenue of $90.01 billion (+18%) and EPS of $4.74, topping consensus. Overall cloud revenue rose 27% to $59.3 billion, with Intelligent Cloud revenue climbing 32% to $39.3 billion.
BNP Paribas analyst Stefan Slowinski highlighted Microsoft's strengthened position as a leading AI beneficiary, citing progress across Azure, Microsoft 365 Copilot, GitHub Copilot, and AI infrastructure.
Slowinski noted that Microsoft addressed major investor concerns, showing tangible AI monetization across its software and infrastructure stacks. He cited potential upside drivers, including broader use of usage-based pricing in Microsoft 365 Copilot, more E7 attach opportunities, higher GPU rental pricing, and stronger OpenAI momentum.
Why it matters
For developers and startups, Microsoft's AI monetization gains traction with Microsoft 365 Copilot and GitHub Copilot, indicating a growing ecosystem for AI tools and services.
Investors should note that Azure growth could accelerate to the high-40% range by Q2 fiscal 2027, with more AI capacity coming online and strong demand.
Microsoft's commitment to remaining free-cash-flow positive in fiscal 2027, along with a lowered capex forecast, suggests a focus on sustainable growth and financial discipline.
Key facts
- Microsoft's Q4 revenue: $90.01 billion (+18%)
- Azure and other cloud services revenue growth: 43%
- Intelligent Cloud revenue growth: 32%
- BNP Paribas' fiscal 2027 Azure growth estimate: 44%
- Microsoft's stock price increase: 2.54%
- BNP Paribas' price target for Microsoft: $549 (22% upside from July 30 price of $451.10)
- Microsoft's fiscal 2027 capex forecast: $220 billion (down from $260 billion)
Context
Microsoft's strong AI and cloud performance highlights the company's strategic focus on AI-driven growth, particularly through its Azure platform and partnerships with OpenAI.
The earnings report underscores the increasing importance of AI in driving cloud revenue and overall business growth for tech giants like Microsoft.
As AI adoption continues to accelerate, companies with robust AI infrastructure and monetization strategies, like Microsoft, are well-positioned to benefit from this trend.
