Zhi Tong Cai Jing·2025-08-21 03:57Core Viewpoint - Microsoft plans to stop offering discounts on Microsoft 365 subscriptions and other cloud software products, potentially leading to price increases of 10% or more, as indicated by NexusTek executives [1][2] Group 1: Pricing Changes and Financial Impact - UBS analysts suggest that the price increase may already be factored into Microsoft's recent performance guidance, but new subscription revenue is expected to be stronger, particularly with the anticipated growth of Microsoft 365 and "Copilot for Microsoft 365" subscriptions [1][2] - The pricing changes will take effect on November 1 for new service agreements or renewals for large companies with sufficient employees [2] - Microsoft aims to provide more consistent and transparent pricing, which is expected to help customers make informed decisions [2] Group 2: Market Performance and Valuation - Following the announcement of the pricing changes, Microsoft's stock price rose over 6%, contributing to a market capitalization of $4 trillion, making it the second company to reach this milestone after Nvidia [2] - UBS maintains a "Buy" rating on Microsoft with a 12-month target price of $650, citing the company's significant influence in the AI application space [1][2] Group 3: Subscription Growth and AI Integration - Microsoft 365's seat growth has been below 10% since 2023, and the company is focusing on increasing revenue per seat through the sale of the AI-powered Copilot add-on and migrating users to more expensive subscription plans [2][4] - The "Copilot for Microsoft 365" is not included by default in subscriptions and requires separate purchase, while "Copilot Chat" is available for free with qualifying subscriptions [4][5] Group 4: Customer Response and Market Dynamics - Analysts expect most customers will agree to pay higher fees to continue using Microsoft's unique applications rather than switching to less popular alternatives [2][4] - Some customers may seek to purchase software through other cloud distributors to mitigate costs as discounts disappear [2][4]