As OpenAI’s ChatGPT, Anthropic’s Claude, SpaceX’s Grok, Google’s Gemini, and Apple’s latest Siri AI compete fiercely for users, Microsoft’s (MSFT) Copilot was once questioned by the market as gradually falling behind in the generative AI race. However, a latest research report from BNP Paribas suggests that this perception may already be outdated.
After a meeting with Microsoft management, BNP Paribas analyst Stefan Slowinski stated that compared to six to twelve months ago, Copilot’s capabilities have seen noticeable improvement, a fact further evidenced by recently secured large-scale customer contracts. Slowinski specifically highlighted Microsoft’s recent major partnership with the UK’s National Health Service, indicating that Copilot is gaining recognition from an increasing number of large institutional clients.
BNP Paribas believes that as product features continue to improve, customer usage rates rise, and the sales system matures, Microsoft Copilot’s commercialization progress is likely to outpace market expectations. The market currently expects that by the end of Microsoft’s fiscal fourth quarter of 2026, Copilot’s number of paid users will reach approximately 25 million. However, BNP Paribas argues that this figure still has room for further upward revision. Slowinski noted that, given sustained growth in customer usage, improvements in core product experiences, and a maturing sales system, Microsoft’s fourth-quarter paid user count for Copilot is likely to significantly exceed current market expectations. Copilot has now been widely integrated into products such as Microsoft 365, Windows, GitHub, and Azure, positioning it as a key entry point for Microsoft’s AI strategy. Microsoft management views the current AI wave as a “once-in-several-decades” industry opportunity, indicating the company’s willingness to continue making long-term investments in data centers, computing infrastructure, and AI model training.
Microsoft’s stock has underperformed the broader market in 2026. So far this year, Microsoft’s share price has fallen about 17%, while the S&P 500 has risen about 7%. Not long ago, Microsoft was still regarded as one of the top AI stock picks, and its fundamental position in the tech industry has not materially changed, yet market perceptions of Microsoft have shifted. From a valuation perspective, measured by price to operating cash flow, Microsoft has not been this cheap since 2019. It is now roughly on par with Amazon, but its valuation is significantly lower than that of Alphabet, Apple, and Nvidia. Some argue that there is no reason Microsoft should not achieve a similar valuation level, making Microsoft a compelling buy at this point.
