Copilot seats are expected to exceed 30 million? Societe Generale is bullish on Microsoft Q4: Revenue and capital expenditure may see "double acceleration"

According to the Zhitong Finance APP, BNP Paribas has released a research report stating that Microsoft's (MSFT.US) fourth-quarter financial report and outlook for the fiscal year 2026 are expected to be catalysts for stock price—revenue growth is set to accelerate, but capital expenditure guidance may also be raised simultaneously.

BNP Paribas analyst Stefan Slowinski stated in the report: "We expect the Azure growth rate for the fourth quarter to be 41% (market consensus is about 40%), while the number of Copilot seats will further accelerate growth. Considering that the fourth quarter is typically a seasonal peak for bookings (with M365 commercial cloud expected to grow 16% year-over-year at constant exchange rates), the number of new seats this quarter is expected to reach 7 to 8 million, and in an optimistic scenario, it may even exceed 30 million."

He further pointed out, "For the first quarter of fiscal year 2027, we expect Azure growth guidance to be 40% to 41% (market consensus is 40.6%), and M365 commercial cloud growth guidance to be 15% to 16% (if Copilot seats exceed 30 million, it is expected to reach 17% at constant exchange rates)."

For the entire fiscal year 2027, BNP Paribas expects Microsoft's revenue growth to be 18%, higher than the market consensus of 16.8%, and this difference is expected to be a catalyst for upward stock price movement.

Additionally, BNP Paribas has raised its forecast for Microsoft's capital expenditures for fiscal year 2027 by 15% to $262 billion, mainly due to ongoing component inflation. The firm maintains a "Outperform" rating on Microsoft but slightly lowered the target price from $555 to $549.

Microsoft plans to release its fourth-quarter results for fiscal year 2026 after the market closes on July 29. The market consensus expects adjusted earnings per share to be $4.24, with revenue of $87.67 billion. In the same quarter of fiscal year 2025, Microsoft's earnings per share were $3.65, with revenue of $76.44 billion.

Previously, Microsoft provided a fourth-quarter Azure growth guidance of 39% to 40% at constant exchange rates. Although BNP Paribas's expected 41% is only slightly higher than the market consensus of 40%, it is significant—it indicates that Azure's growth rate, after stabilizing around 40% for several consecutive quarters, is still expected to accelerate slightly.

Several institutions share a similar optimistic outlook. Goldman Sachs reported that the fourth-quarter Azure growth at constant exchange rates is expected to reach 40% to 41%, and the guidance for the next quarter may also remain in this range. HSBC Research expects Azure growth to be around 39.6%.

The commercialization process of Copilot is another major suspense for this financial report.

BNP Paribas expects the number of new Copilot seats this quarter to reach 7 to 8 million, and in an optimistic scenario, it may even exceed 30 million. Previously, BNP Paribas had estimated in May that the number of Copilot seats could exceed 25 million by the end of fiscal year 2026. According to public data, the number of paid enterprise seats for Microsoft M365 Copilot had already surpassed 20 million in April, with a year-over-year growth of 160%, and user weekly activity has matched that of Outlook Slovinski stated that user sentiment for Copilot has significantly improved, with engagement in Excel, PowerPoint, and Word continuing to rise. Microsoft has also recently emphasized stronger monthly engagement and retention metrics. Preview products like Copilot Cowork have received positive feedback, indicating that Microsoft is effectively addressing AI pressure from competitors like Anthropic.

Notably, Microsoft's CFO Amy Hood clearly stated during the Q3 earnings call that the growth in Copilot seat numbers will "accelerate again" in Q4. This suggests that management is also quite confident about the commercialization prospects of Copilot.

For investors, the number of Copilot seats is a key indicator of enterprise AI penetration—if it exceeds 30 million, it indicates that enterprise AI adoption is accelerating; if it falls below 20 million, it may raise concerns about the speed of commercialization