Microsoft shares were little changed in late-morning trade, up about 0.3%, as investors looked past a revised OpenAI deal and waited for earnings due Wednesday. The stock recently traded at $426.14, after moving between $418.49 and $428.04.
Azure Growth in Focus
The next test is Azure, Microsoft's cloud platform, and whether heavy AI spending is turning into enough growth to satisfy investors. Azure revenue is expected to rise about 40% in the January-to-March quarter, while overall Microsoft revenue is forecast to grow 16.2% to $81.39 billion, according to Visible Alpha and LSEG data.
Microsoft, Alphabet, Amazon and Meta are expected to pour about $600 billion into AI this year, a bill that has pressed cash flow even as valuations have held up. “What investors are looking for – us included – is what’s the return on all the capital expenditure?” Joe Maginot, large-cap portfolio manager at Madison Investments, told Reuters.
Revised OpenAI Partnership
Microsoft and OpenAI said on Monday that Microsoft remains OpenAI’s primary cloud partner, but OpenAI can now serve all its products across any cloud provider. Microsoft’s license to OpenAI models and products runs through 2032 but is no longer exclusive. The companies also said Microsoft will no longer pay OpenAI a revenue share, while OpenAI’s revenue-share payments to Microsoft continue through 2030 at the same percentage, subject to a cap. Reuters reported that Microsoft will receive a 20% cut of OpenAI revenue through 2030.
This change means Amazon and Google matter in this story. OpenAI can now court Microsoft’s cloud rivals more freely, and Amazon CEO Andy Jassy said OpenAI models would be available directly to developers on Amazon Web Services “in the coming weeks.” Gil Luria, analyst at D.A. Davidson & Co., told Reuters the new deal was “essential” for OpenAI in the enterprise market, adding that AWS and Google Cloud customers had been limited by the earlier exclusive relationship.
Copilot Deployment and Adoption
Microsoft has a counterpoint: Copilot. Reuters reported Monday that Accenture will roll out Microsoft’s Copilot 365 AI assistant to roughly 743,000 employees, the largest enterprise deployment of the chatbot, though the companies did not disclose financial terms. Accenture CEO Julie Sweet said the early rollout had moved staff into “higher-value work.” The deal gives Microsoft a fresh proof point after Reuters reported that only a little more than 3% of its more than 450 million Microsoft 365 enterprise users pay for the $30-a-month Copilot product.
Risk and Outlook
But the risk is still plain. If Azure growth disappoints, Copilot adoption stays thin or AI infrastructure spending keeps rising faster than cash generation, Microsoft’s stock could face another hard reset. Melissa Otto, head of research at S&P Global Visible Alpha, told Reuters that Chief Executive Satya Nadella needs to explain why Microsoft’s model will not be disrupted by AI. “Nadella has to address that,” she said.
Microsoft said it will publish fiscal third-quarter results after the market closes on Wednesday, April 29, with a webcast at 2:30 p.m. Pacific Time. For now, the stock is holding steady. The harder test comes after the numbers.
