Microsoft's (MSFT) Cloud Deal Boosts Federal Market Presence

Microsoft Corp (NASDAQ:MSFT) is one of the best tech stocks to buy according to hedge funds. On September 2, the US General Services Administration said that Microsoft Corp (NASDAQ:MSFT) has agreed to give the U.S. agencies a discount on its cloud services. The move comes amid the administration’s push to sign deals with tech companies.

The discount from the tech behemoth could amount to $3 billion in the first year, the GSA said. While the size of the deal is not mentioned, the sheer size of the discount means that this could be a very large federal commitment. Even though the company’s margins might take a small hit, the size of the contract and the lock-in effects are a net positive for Microsoft. The deal is available for federal agencies to opt into through September 2026, giving the cloud giant a multi-year runway to expand its footprint within the U.S. government.

As a part of the deal, Microsoft will offer its Gen AI Chatbot, Microsoft Copilot, for free to current government users. Federal agencies will also get discounted prices on cloud products like Azure and Microsoft Sentinel. Offering free access to the chatbot to the federal users unlocks the bot to a large user base.

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