Microsoft Corporation (MSFT.US) leads the wave of AI applications! BNP Paribas is betting on cloud computing giants as the main investment theme in software.

A recent research report released by the French bank BNP Paribas shows that as the wave of AI applications continues to sweep through global enterprises, even with global computing giants such as Microsoft Corporation, Alphabet Inc. Class C continuing to dominate the software market in the field of artificial intelligence applications, Financial Institutions, Inc. believes that global cloud software leaders ServiceNow (NOW.US) and SAP (SAP.US) will be among the most "resilient growth" companies in the global software industry, but their stock price prospects will be far inferior to cloud giants like Microsoft Corporation. BNP Paribas maintains a strong bullish stance on AI applications and cloud computing leaders like Microsoft Corporation, believing that Microsoft Corporation will be one of the biggest beneficiaries of the AI application wave. Analyst Stefan Slowinski from BNP Paribas wrote in a report to clients, "We believe that the results of an important survey targeting global enterprises in January are a warning signal for the software industry, reinforcing recent market negative sentiment towards some software stocks." "As a comparison, the super cloud computing companies continue to 'win' in enterprise survey reports, for example Microsoft Corporation, Amazon.com, Inc. AWS, and Alphabet Inc. Class C's overall spending scores in the cloud sector remain relatively resilient, public cloud computing demand is also significantly increasing under the promotion of AI application penetration. SAP and ServiceNow, on the other hand, appear particularly prominent due to improved demand." Slowinski said. Overall, BNP Paribas is more bullish on large cloud computing giants (such as Microsoft Corporation, Amazon.com, Inc., and Alphabet Inc. Class C) continuing to benefit from the wave of AI applications and the growth trend of public clouds, while adopting a more cautious attitude towards typical cloud software companies (such as ServiceNow, SAP, Datadog). ServiceNow and SAP, while "resilient," are not the same as "high-growth core AI wave beneficiaries". As the super cloud computing giants dominate the AI era, BNP Paribas is more favorable towards Microsoft Corporation compared to traditional cloud software leaders, believing that AI application and public cloud expenditure will continuously lean towards large-scale cloud service providers, and the latest enterprise survey shows that enterprises in general have a more cautious attitude towards IT expenditure related to traditional cloud software companies. Analyst Slowinski from BNP Paribas reiterated his "outperform market" rating for Microsoft Corporation (MSFT.US) stock, maintaining a target stock price for Microsoft Corporation at $632; however, he substantially lowered the target stock price for ServiceNow from the previously optimistic target of $186 to $120. As of the Thursday closing of the US stock market, Microsoft Corporation's stock price closed at $451.140, while ServiceNow closed at $128.560, highlighting Slowinski's cautious stance on the valuation and stock price outlook of ServiceNow and his optimistic outlook for Microsoft Corporation. Additionally, Slowinski expressed surprise at the sudden deterioration in enterprise adoption of cloud monitoring and cloud data warehousing companies such as Datadog (DDOG.US) and Databricks in the January enterprise survey, especially given that these two cloud software companies were at the top in the institution's previous enterprise survey two quarters ago. According to the enterprise survey report cited by BNP Paribas, Microsoft Corporation, Amazon.com, Inc. AWS, and Alphabet Inc. Class C's GCP cloud computing platforms as the main drivers of AI applications and cloud infrastructure, continue to score high in enterprise software spending surveys, showing that enterprise customers have more resilient spending on these platforms and are more optimistic about order growth. The report accurately describes ServiceNow and SAP as having relatively good fundamental resilience and improved demand, but the wording on their future prospects is not as positive as for the cloud computing giants, and the substantial reduction in the target price for ServiceNow demonstrates a more cautious risk asset pricing, with some cloud-native/monitoring companies even showing a weakening trend. The super cloud computing giants are expected to continue benefiting from the AI+ public cloud wave. The super cloud computing giants are considered to be the most core infrastructure providers for enterprise AI training/inference systems (such as Microsoft Corporation's Azure, Amazon.com, Inc.'s AWS, Alphabet Inc. Class C's GCP GPU/TPU/AI computing clusters). BNP Paribas' enterprise spending trend survey shows that whether enterprises are purchasing specific AI application software or not, AI platform resource spending is always a core budget, making super cloud computing companies like Microsoft Corporation more stable beneficiaries in the AI investment cycle. BNP Paribas believes that enterprise-level SaaS companies such as ServiceNow/SAP do have customer stickiness and a relatively stable revenue growth curve (thus are dubbed "resilient"), but unlike underlying AI computing resources, their growth often depends heavily on enterprise IT budget cycles, which are more likely to be tightened during macroeconomic and political uncertainty; SaaS profits and future growth path rely more on industry adoption cycles, rather than the "ignoring cycle" continuous expansion attributes of AI infrastructure or cloud computing PaaS platforms themselves. Amazon.com, Inc., Microsoft Corporation, and Alphabet Inc. Class C are fully focused on laying out and generating AI-related software developers' ecosystems for both the B-side and C-side applications, aiming to significantly lower the technical barriers for non-IT professionals across various industries to develop AI applications, and provide powerful cloud-based AI computing platforms, especially cloud-based AI inference computing resources. One of the core participants in the "Alphabet Inc. Class C AI ecosystem" - the database software developer MongoDB (MDB.US) that provides database platform services on the Alphabet Inc. Class C cloud platform (Google Cloud) recently announced revenue and profit that exceeded expectations and raised its full-year performance outlook, echoing the even larger scale AI Capex released by Alphabet Inc. Class C and the stronger revenue growth of its cloud computing business, fully highlighting the ongoing high prosperity of big cloud computing manufacturers such as Alphabet Inc. Class C, Microsoft Corporation, and Amazon.com, Inc. in AI computing infrastructure construction and the AI application side of the AI development ecosystem, cloud inference AI computing demand remains in a super-high prosperity zone. Since the beginning of this year, the advancement of the Gemini 3 series (focused on continuous expansion of the ecosystem/application) and the popularity of Claude in "programming/agent-based usage" have indeed accelerated the landing of generative AI at the B-side (enterprise processes, development, customer service, analysis) and C-side (AI search/recommendation/consumer intelligent bodies), objectively shifting the computing demand from "training" to further extensive inference and online services, significantly boosting the trajectory of global cloud computing IaaS infrastructure (AI GPU/AI ASIC accelerators, networking, storage, big data engineering) and the overall cloud computing PaaS AI developer ecosystem platform. Microsoft Corporation will release its second quarter financial results after the US stock market closes on January 28. Wall Street analysts generally expect the second quarter earnings of this cloud computing and AI leader to be around $3.92 per share - indicating a potential year-on-year growth of 34%, with an estimated total revenue of about $80.28 billion - indicating a potential year-on-year growth of 30%. ServiceNow will also release its earnings after the US stock market closes on January 28, with Wall Street analysts generally expecting the company's earnings per share to be around $0.89 and revenue to be about $3.53 billion - potentially up 19% year-on-year.