Google-SpaceX cloud deal signals Azure upside, BNP says

Google-SpaceX $920M Cloud Deal Signals Azure Upside, Says BNP Paribas

Google’s decision to pay SpaceX $920 million per month for AI computing capacity is sending a bullish signal for Microsoft’s Azure cloud business, according to BNP Paribas analyst Stefan Slowinski, who argues the deal underscores demand that remains well ahead of available supply across the industry.

In a note published Monday, Slowinski said Google’s willingness to commit roughly $30 billion over 32 months for access to approximately 110,000 Nvidia GPUs housed in SpaceX data centers demonstrates that AI infrastructure pricing has room to move higher — a dynamic that would directly benefit Azure as its own contracts come up for renewal. BNP Paribas maintained a Buy rating on Microsoft with a $555 price target, suggesting that if pricing strengthens on renewals, Azure’s growth rate could climb into the mid-40s percent range.yahoo

The SpaceX Deal

SpaceX disclosed the Google agreement in a regulatory filing on June 5, just days before its planned initial public offering. Under the terms, Google will pay $920 million monthly from October 2026 through June 2029, with a reduced fee during a ramp-up period through September. Google retains the right to terminate if SpaceX fails to deliver the committed GPU capacity by September 30, 2026.pcmag

The deal follows a separate $1.25 billion-per-month contract SpaceX signed with Anthropic in May, bringing SpaceX’s combined annual recurring revenue from AI computing to approximately $26 billion.reuters

Azure’s Position

Slowinski’s thesis rests on Microsoft’s own momentum. Azure revenue grew 40% year over year in the March quarter, topping the company’s own guidance, while Microsoft reported $627 billion in commercial remaining performance obligations — a measure of contracted future revenue. BNP Paribas continues to model Azure growth above 40% over the next several quarters as Microsoft expands AI infrastructure capacity.sahmcapital

The analyst also flagged potential Azure price increases as memory and CPU costs inflate, noting that AI-related contracts approaching renewal could carry higher rates. That pricing power, combined with what Slowinski called improving feedback from Microsoft Copilot users, underpins BNP’s view that the market has yet to fully price in Azure’s growth trajectory.intellectia