BNP Paribas gives Microsoft (MSFT.US) a "Buy" rating: Azure price increases will be gradually implemented after contract renewals, and a deal with SpaceX may be announced soon.

According to the Zhitong Finance APP, investment institution BNP Paribas stated on Monday that after meeting with Microsoft (MSFT.US) executives, they believe that in the long term, Microsoft still has room to further increase Azure prices. BNP Paribas analyst Stefan Slowinski said that Microsoft executives admitted Azure prices are rising but added that the company will not tear up existing contracts and will only raise prices after contracts expire. Slowinski rates Microsoft as “Buy” with a target price of $549.

“Instead, pricing will reset upon renewal, meaning any Azure pricing upside will be gradually embedded into performance rather than providing a substantial step change in Azure’s growth in the short term,” Slowinski wrote in a report to clients. “Importantly, Microsoft also reiterated that its recent Azure strength is not price-driven—fleet-level efficiency improvements and continued capacity ramp are still the most important drivers for growth. This reassures us—the acceleration of Azure’s growth to the mid-40% range was achieved before Microsoft saw any material pricing impact.”

Beyond pricing, Slowinski also noted that Microsoft pushed back against a recent report claiming the company plans to increase data center capacity to 38 GW by 2032.

The topic of a potential cloud computing deal with SpaceX (SPCX.US) was also mentioned, partly due to recent comments from Nebius (NBIS.US) CEO Arkady Volozh, who hinted at the existence of such a deal. (SpaceX recently disclosed it had signed a new computing power client, expected to spend about $1 billion per month starting in December.)

“In response, the company declined to comment on any specific vendors but reiterated that it is still actively seeking incremental computing resources, as the company remains in catch-up mode. Microsoft also acknowledged that, in the current environment, it is very difficult to find instant access to near-term capacity, especially infrastructure that meets Microsoft’s specifications,” Slowinski added. “Therefore, while there is no confirmation of a SpaceX relationship, we would not be surprised if there is a possible announcement in the future.”

In addition, Microsoft executives provided more details on the agreement with OpenAI. Slowinski said the tech giant confirmed a $38 billion revenue-sharing cap but noted that OpenAI’s revenue sharing is not the reason for Azure’s recent outperformance, “and made clear that if it becomes a significant upside driver, the company would explicitly point out this contribution.”