12:12 PM EDT, 10/22/2025 (MT Newswires) -- Microsoft's ( MSFT ) near-term catalyst path appears to be "compelling", ahead of the company's fiscal Q1 results next week, with investors concerns likely revolving around Azure growth potential and a revised Microsoft-OpenAI partnership deal, UBS said in a Wednesday note.

UBS said that on the artificial intelligence and graphics processing unit front, demand trends from OpenAI "appear to be strong and Microsoft ( MSFT ) is standing up incremental AI infra capacity." UBS further raised its Q1 Azure growth estimate to 39% from 38%.

Noting Microsoft's ( MSFT ) September announcement of a "non-binding memorandum of understanding" with OpenAI, UBS said it expected news on the new terms of agreement over the next month, an event which could further remove an overhang on the stock.

"We wonder if this announcement could be accompanied by a material OpenAI-Microsoft cloud commitment, improving the outlook for Azure growth in the out-years," UBS analysts said.

The firm rates Microsoft ( MSFT ) as buy with a $650 price target.

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