Tech giant Microsoft (NASDAQ:MSFT) has secured e-commerce giant Amazon.com (NASDAQ:AMZN) as its biggest customer so far. In a $1 billion deal spanning five years, Microsoft is said to sell 1 million license seats of its Office 365 Suite to Amazon. An Insider report citing internal company documents and people familiar with the matter broke the news last night.
Currently, Amazon uses local, on-premise Office products. The e-commerce retailer will start installing the new 365 suite in November for corporate employees and frontline workers. At the same time, Microsoft is expected to release its latest version of Office 365, loaded with artificial intelligence (AI) capabilities.
Notably, Microsoft Azure and Amazon Web Services (AWS) are stiff rivals in the cloud computing space. While both companies have not issued official statements, it appears that this agreement could signify the start of a possible friendship between the two tech giants.
Is Microsoft Stock Expected to Rise?
Yes, based on the average Microsoft price target of $398.34, MSFT stock is expected to rise nearly 20% in the next twelve months. The stock commands a Strong Buy consensus rating on TipRanks, with 31 Buys and four Hold ratings. Meanwhile, MSFT stock has gained 39.5% so far this year.
Yesterday, Loop Capital Markets analyst Yun Kim initiated coverage of MSFT with a Buy rating and a $425 (28% upside) price target. The five-star analyst is bullish about the company’s long-term potential for AI. Kim noted that MSFT is benefitting from OpenAI’s offerings in its Azure cloud computing business.
Moreover, Kim is encouraged by Microsoft’s integration of M365 Copilot software across all its Office 365 products in November. Plus, its Security Copilot makes it one of the most lucrative products in the cybersecurity solutions market. Overall, the analyst believes that Microsoft’s margins will remain intact despite heavy investments.
