11:42 AM EST, 12/10/2024 (MT Newswires) -- C3.ai's ( AI ) strategic alliance signed with Microsoft ( MSFT ) in October is viewed as a game changer, Morgan Stanley said in a note Tuesday.

Under the 5.5-year agreement, C3.ai ( AI ) will be established as a preferred AI application on Azure, with all C3.ai ( AI ) enterprise AI apps available on the Azure portal. C3.ai ( AI ) solutions can also be ordered on the Azure Marketplace, allowing customers to fulfill their Azure commitments using C3.ai ( AI ) applications.

C3.ai ( AI ) products are orderable on Microsoft ( MSFT ) paper under the Microsoft ( MSFT ) enterprise licensing agreement, and Microsoft ( MSFT ) will subsidize C3.ai ( AI ) pilots and production deployments throughout the term of the agreement, according to the note.

The investment bank said the deal, which has an incentive structure, could be a potential major driver of revenue growth and "perhaps outweighs current uncertainty" on Baker Hughes ( BKR ) .

Morgan Stanley noted investors' concerns on the potential revenue impact on the business should C3.ai's ( AI ) partnership with Baker Hughes ( BKR ) which expires in June 2025 is not renewed.

"An encouraging disclosure is that revenue exposure to Baker Hughes ( BKR ) has fallen materially in recent years," the firm said.

Morgan Stanley boosted its price target on C3.ai ( AI ) to $32 from $21 and maintained its underweight rating.

The company's shares were down 2.1% in recent trading.

Price: 40.80, Change: -0.88, Percent Change: -2.11