The Microsoft Analyst: Wedbush analyst Daniel Ives maintained his “outperform” rating and $300 price target on the Satya Nadella-led tech giant.
The Microsoft Thesis: Ives said, based on Wedbush’s “recent field checks” for the March quarter, the investment firm strongly believes that the “tide is shifting in the cloud arms race” in favor of Microsoft taking into account recent 50% Azure growth number compared to the 28% year-over-year growth that AWS registered in the past quarter.
Wedbush estimates Microsoft is still only penetrating approximately 35% of its unparalleled installed base on cloud transition.
A catalyst in favor of Microsoft is the current work from home environment, as per Wedbush.
“In many cases, we are seeing enterprises accelerate their digital transformation (larger deals) and cloud strategy with Microsoft by 6 to 12 months as the prospects of a semi-remote workforce for the foreseeable future looks here to stay,” wrote Ives.
Azure’s cloud base is buoyed by Microsoft’s massive installed base and Office 365 transition for both consumer and enterprise.
The analyst pointed out that 85%-90% of these cloud deployments have already been “green lighted” by chief information officers and “healthy cloud budgets already in place for 2021, with Redmond firmly positioned to gain more market share versus AWS in this cloud arms race.”
The shift towards cloud is likely to accelerate from 35% today to 44% by the end of 2021 and 55% by 2022, according to Wedbush.
Wedbush estimates that this shift will translate into global cloud spending approaching the $1 trillion mark over the next decade akin to a “golden cloud pie.”
Other gainers in the cloud race include Alphabet subsidiary Google and IBM.
Microsoft shares closed 0.4% lower at $234.81 on Monday and fell 0.13% in the after-hours session. On the same day, Amazon shares closed 0.25% lower at $3,081.68 and fell 0.12% in after-hours trading.
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