I'm LongbridgeAI, I can summarize articles.BNP Paribas released a report stating that the view of Microsoft Copilot lagging in the generative AI competition is outdated. BNP Paribas analysts believe that the capabilities of the Copilot product have significantly improved, and recent contracts with large clients such as the UK's NHS demonstrate its recognition. With the enhancement of features, increased usage rates, and a mature sales system, its commercialization progress is expected to exceed expectations, with the number of paid users potentially surpassing the market expectation of 25 million
According to Zhitong Finance APP, amidst the competition for users among OpenAI's ChatGPT, Anthropic's Claude, SpaceX's (SPCX.US) Grok, Google's (GOOGL.US) Gemini, and Apple's (AAPL.US) newly launched Siri AI, Microsoft's (MSFT.US) Copilot has faced market skepticism about its gradual lag in the generative artificial intelligence race.
However, a recent research report from BNP Paribas suggests that this view may be outdated.
After holding a communication meeting with Microsoft's management, BNP Paribas analyst Stefan Slowinski stated that Copilot's capabilities have significantly improved compared to 6 to 12 months ago, and recent large client contracts further validate this.
Slowinski wrote in the report: "Copilot's current capabilities far exceed the levels of 6 to 12 months ago."
He specifically mentioned that Microsoft's recent important collaboration with the UK's National Health Service demonstrates that Copilot is gaining recognition from an increasing number of large institutional clients.
Copilot's commercialization progress may exceed market expectations
BNP Paribas believes that as product features continue to improve, customer usage rates increase, and the sales system matures, Microsoft's Copilot's commercialization progress is expected to be faster than market expectations.
Currently, the market generally expects that by the end of Microsoft's fiscal year 2026 Q4, the number of paid users for Copilot will reach approximately 25 million.
However, BNP Paribas believes there is still room for further upward adjustment of this number. Slowinski stated: "Considering the continuous growth in customer usage, improvements in core product experience, and the maturation of the sales system, we believe that the number of paid users for Copilot in Microsoft's Q4 is likely to significantly exceed current market expectations."
Copilot has now been widely integrated into Microsoft 365, Windows, GitHub, and Azure product systems, becoming an important entry point for Microsoft's AI strategy.
Microsoft may adjust Copilot's pricing model
In addition to user growth, investors are also concerned about how Copilot will achieve larger-scale monetization in the future.
BNP Paribas revealed that Microsoft is exploring adjustments to Copilot's business model, gradually shifting from a traditional per-user pricing model to a combined pricing model of "number of users + actual usage."
Although Microsoft has not yet announced specific pricing adjustment plans, management has repeatedly mentioned the development experience of GitHub Copilot.
Initially, GitHub Copilot charged mainly based on the number of users; as the demand for AI code generation grew rapidly, the company began to explore a usage-based pricing model to more accurately reflect the costs and value brought by high-computational tasks.
BNP Paribas believes that as enterprise clients increasingly apply Copilot to complex workflows, similar pricing models may expand to more product lines in the future This means that Microsoft's future AI business revenue growth may not only rely on the number of new users but will also benefit from an increase in user engagement.
Azure Faces Pressure from Computing Costs
In terms of artificial intelligence infrastructure, the market has recently focused on the rising GPU rental prices, which may increase the costs of cloud computing services.
In this regard, Société Générale believes that Microsoft still possesses strong cost control capabilities.
Despite the tight supply of GPU resources, Microsoft is not in a hurry to raise Azure cloud service prices across the board.
Slowinski pointed out that Microsoft's management mentioned in communications that the company is cautious about large-scale price increases, mainly considering customer relationships, market competition, and long-term strategic factors. "Microsoft is concerned that if it raises prices hastily, Amazon AWS and Google Cloud Platform (GCP) may introduce more attractive offers to compete for customers."
Therefore, the company prefers to alleviate cost pressures by optimizing infrastructure utilization and improving operational efficiency rather than simply passing costs onto customers.
AI is at a once-in-a-generation important development stage
Regarding the capital expenditure issue that investors are generally concerned about, Microsoft's management has signaled a continued large-scale investment in AI infrastructure.
Société Générale stated that Microsoft has not set a clear free cash flow (FCF) threshold to limit the scale of AI investments. In other words, as long as opportunities in the AI market still exist, the company will continue to expand related investments.
Microsoft's management views the current AI wave as a "once-in-a-generation" industrial opportunity, indicating that the company is willing to make long-term investments in data centers, computing facilities, and AI model training.
As the capabilities of the Copilot product continue to enhance, enterprise customer adoption rates keep rising, and the Azure cloud platform further integrates with the OpenAI ecosystem, Microsoft's competitive advantage in the enterprise AI market remains solid