- Microsoft stock will climb to $300 per share, according to analysts at Wedbush.
- Analyst Daniel Ives said “recent field checks” have made Wedbush believe Azure is gaining market share in the cloud business.
- Microsoft saw total revenue growth of 17% year-over-year and cloud revenue growth of 50% year-over-year in its most recent earnings release.
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Microsoft stock will climb to $300 as the company continues to gain cloud market share Wedbush analysts said in a note to clients on Monday.
Wedbush analyst Daniel Ives lifted the firm’s price target for Microsoft to $300 from $285 after “recent field checks” in the industry have led him to believe Microsoft’s Azure cloud business is gaining market share from the competition.
Ives had already raised his price target for the tech giant to $285 from $275 after Microsoft outperformed in its latest earnings report, but recent updates have the analyst seeing even more upside ahead.
Microsoft beat analyst revenue and earnings estimates for the quarter that ended in December on Jan 26, turning in record quarterly revenue of over $43 billion, up 17% year-over-year, and EPS of $2.03.
Analysts were most excited by the incredible growth of Microsoft’s Azure cloud business. The segment grew revenues by 50% year-over-year versus just 28% year-over-year growth at the company’s major competitor Amazon Web Services.
Now, analysts at Wedbush believe “the tide is shifting in the cloud arms race” and Microsoft is pulling ahead of Amazon’s AWS and others due to its broad installed base of customers.
“We believe Azure’s cloud momentum is still in its early days of playing out within the company’s massive installed base and the Office 365 transition for both consumer/enterprise is providing growth tailwinds over the next few years,” Ives said.
Wedbush also believes cloud adoption is only going to accelerate in 2021 even after a record year in 2020 due to the pandemic and stay-at-home trends.
“Based on our conversations with CIOs, CISOs, and IT product managers globally over the last month we believe cloud-driven architecture IT growth in 2021 could surpass that of 2020 as more enterprises rip the band-aid off on digital transformations,” Ives said.
The analysts continued, “we believe this disproportionally benefits the cloud stalwart out of Redmond, as Nadella & Co. are so well positioned in its core enterprise backyard to further deploy its Azure/Office 365 as the cloud backbone and artery.”
Growing market share and prime conditions for Azure are probably music to the ears of executives at Microsoft. Especially after former CEO Steve Ballmer said he wished the company had got into cloud services sooner.
“Azure — I wish we probably started a year or so, two years earlier,” Ballmer said in a live stream on Clubhouse. “We started actually with platform as a service instead of infrastructure as a service. Probably we would do that a little bit differently. It cost us a little bit of time in the eventual battle, if you will, with AWS.”
Microsoft traded up slightly in premarket hours on Tuesday at $245.50 per share, implying a potential 22% price increase based on the Wedbush analysts’ predictions.