UBS has increased its price target for Microsoft Corporation (NASDAQ: MSFT) shares to $525.00 from $500.00, while maintaining a Buy rating.

The adjustment is based on the expected growth of Microsoft's Azure services, which will see new capacity being launched in the latter half of the year. However, the growth estimate for Azure in the third quarter has been slightly revised down to 34.0% from 35.6%.

Analysts are confident in Microsoft's strong position in the market, particularly in relation to concerns about an "AI winter." They note that smaller cloud providers focused on GPU services do not have significant excess capacity. The report also mentions that declining prices for Azure OpenAI API could impact AI revenues, but the potential end of an exclusivity agreement is seen as a positive for Microsoft. Furthermore, there is an increasing trend of price discounting for Microsoft 365 Copilot, which may influence the company's pricing strategy.