On Wednesday, UBS renewed its buy recommendation and its 12-month price target of $650 for Microsoft shares, believing that the new agreement with OpenAI was good news for the American software giant.

The broker highlights in a research note that not only was this partnership sealed earlier than expected, which in itself is already a favorable outcome, but that its terms are positive since the owner of ChatGPT has committed to buying some $250bn worth of capacity from Microsoft, even though the exact duration of the contract has not been disclosed.

However, if it were to span seven or eight years, this would represent a budget of around $30bn to $35bn per year, several times the current level of OpenAI's spending at Microsoft, he notes.

This means, in his view, that the Redmond-based group is assured of a high volume of business for Azure, making the growth of its cloud platform more predictable and robust.

With regard to intellectual property, Microsoft has secured strong rights to OpenAI's models and intellectual property, strengthening its position in the field of AI, adds the broker, who believes that the clause relating to artificial general intelligence (AGI) does not really constitute a source of risk, as the heads of Microsoft and OpenAI themselves have stated that the term 'AGI' has become vague and unclear, and therefore of little practical significance.

According to UBS, this agreement eliminates uncertainties surrounding the relationship between Microsoft and OpenAI and strengthens their long-term partnership, which is a positive factor given that Azure's current growth trends are already strong, leading it to remain positive on the stock.