Microsoft Sets up a Second AI Paycheck as Copilot Shifts To Pay-Per-Use

Microsoft Corp. (NASDAQ:MSFT) is entering fiscal 2027 with multiple AI-driven growth engines, as Azure demand, its OpenAI economics, and emerging consumption-based Copilot pricing create additional monetization opportunities across the business. BNP Paribas Sees Multiple AI Tailwinds BNP Paribas analyst Stefan Slowinski said Microsoft is increasingly positioned to benefit from a second layer of AI monetization beyond infrastructure demand. He highlighted Microsoft’s OpenAI revenue share and consumption-based pricing across Microsoft 365 Copilot as potential sources of upside to current expectations. With OpenAI reportedly approaching nearly $70 billion in annual recurring revenue exiting Microsoft’s fiscal first quarter of 2027, Slowinski sees a path for Azure growth to reach as high as 46% in constant currency during fiscal first-quarter and approach 50% in fiscal second-quarter. Ahead of Microsoft’s fiscal first-quarter results, BNP Paribas expects the company to benefit from accelerating revenue growth while continuing to generate positive free cash flow. See More: Top Growth Stocks Copilot Consumption Could Lift M365 Growth Slowinski pointed to GitHub Copilot as an early example of how consumption-based billing can outperform initial expectations. He sees the potential for a similar pattern as usage-based Copilot revenue begins contributing more meaningfully to Microsoft 365. BNP Paribas estimates that Copilot consumption could add roughly one percentage point of incremental Microsoft 365 Commercial Cloud growth by the fiscal fourth quarter. Slowinski therefore sees potential for Microsoft to beat Azure expectations, issue stronger fiscal second-quarter guidance and deliver upside in Microsoft 365 Commercial Cloud while maintaining management’s commitment to positive free cash flow. Cramer Sees Copilot Supporting Microsoft CNBC’s Jim Cramer also identified Microsoft as one of a small group of AI leaders helping offset pressure from rising interest rates. "Here, I think there’s tremendous distortion caused by some very big winners, namely NVIDIA Corp. (NASDAQ:NVDA), Microsoft and Meta Platforms Inc. (NASDAQ:META)," Cramer said. He pointed to improving sentiment around Copilot as a key catalyst for Microsoft. At the same time, Nvidia benefits from strong AI chip demand and Meta gains momentum around its Muse personal AI agent. Microsoft accounted for roughly 5.8% of the S&P 500 as of Friday’s close, giving moves in the company an outsized influence on the broader index. Ignite Could Become The Next Catalyst BNP Paribas also identified Microsoft’s Ignite conference as a potential catalyst. Microsoft is expected to hold a Financial Community Briefing on Nov. 17, with CEO Satya Nadella addressing investors in that format for the first time in many years. Slowinski said the return of the briefing could indicate Microsoft’s willingness to provide more strategic and financial detail about its next phase of AI-driven growth and any potential capital-unlock strategy tied to its recent re-segmentation. BNP Paribas Raises Microsoft Price Forecast BNP Paribas maintained its Outperform rating and raised its price forecast to $604 from $549, implying about 15% upside from Microsoft’s Oct. 5 price of $525.20. Slowinski increased his fiscal 2027 revenue and earnings-per-share estimates by 1% to 2%. He now models Azure growth of 46% in fiscal first-quarter 2027 and 49% in fiscal second-quarter. BNP Paribas values Microsoft using a sum-of-the-parts framework based on 27.5 times fiscal 2028 earnings, up from 25 times previously, while also incorporating Microsoft’s stake in OpenAI. Slowinski said the broader sector re-rating primarily drove the higher price forecast. MSFT Price Action: Microsoft shares were up 1.35% at $532.25 at the time of publication on Tuesday, according to Benzinga Pro data. Read Also: Investors Are Missing Microsoft’s Biggest AI Edge, Analyst Says Photo: Shutterstock.com