Volkswagen, Microsoft Ink Self-Driving Software Partnership

Volkswagen’s software arm Car.Software announced a collaboration with Microsoft to build a cloud-based automated driving platform (ADP) using the tech giant’s Azure software. The partnership is aimed at helping the vehicle maker offer faster automated driving services.

Volkswagen and Microsoft (MSFT) have been strategic partners since 2018 in the development of the Volkswagen automative cloud.

Car.Software CEO Dirk Hilgenberg said, “By combining our connected driving solutions development expertise with Microsoft’s cloud software engineering knowledge, we accelerate the delivery of safe mobility services.”

Scott Guthrie, Executive VPof Cloud and AI at Microsoft commented, “Azure and its data and AI capabilities will help Volkswagen in delivering automated driving solutions faster and help their transformation into software driven mobility provider.”

The automated driving platform is expected to help Car.Software reduce development cycles to weeks from months and manage large volumes of data. (See Microsoft stock analysis on TipRanks).

Volkswagen plans to invest about 27 billion euros on digitalization and increase in-house developed car software from the current 10% to 60% by 2025. Furthermore, the first connected test fleets are expected to be put on the road in 2021.   

This month, Piper Sandler analyst Brent Bracelin reiterated bullish call on Microsoft stock with a $300 price target (24% upside potential). Bracelin sees Microsoft as one of the best-positioned cloud titans for investors to own for the next decade. Additionally, he expects the company’s overall cloud software revenue to jump from $59 billion in 2020 to $306 billion by 2030.

The rest of the Street remains firmly bullish about the stock with a Strong Buy consensus rating based on 24 unanimous Buys. That’s with an average analyst price target of $280.18, implying 15% upside potential from current levels. That’a after the stock already gained 29% over the past year.

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