Wedbush: Microsoft's Azure Is Closing In On Amazon Web Services

The bull case for Microsoft Corporation MSFT is based on the belief that its cloud platform Azure remains in the "early days of playing out," according to Wedbush.

The Analyst

Daniel Ives maintained an Outperform rating on Microsoft with an unchanged $155 price target. The stock is listed as a top pick on Wedbush's best ideas list.

The Thesis

Wedbush's first-hand checks point to a "clear acceleration" in Microsoft inking "larger and more strategic" enterprise cloud deals, Ives said in a Wednesday note. (See his track record here.)

Redmond appears to be on track to win the majority of new cloud deployments, and this momentum can be sustained for at least the next 12 to 18 months, the analyst said.

Rival cloud platform Amazon.com, Inc. AMZN's Amazon Web Services is still the leader in the overall cloud segment, but Microsoft is showing signs of closing the gap, Ives said. Azure showed 73% year-over-year growth in the most recent quarter, he said.

Over time, Microsoft is positioned to become a "cloud behemoth" aided by an "army of partners" and a strong sales force, the analyst said.

Microsoft has several other catalysts to support growth, including the Office 365 transition among both consumer and enterprises, Ives said. The company is seeing traction with newer integrated product initiatives at LinkedIn and other platforms, he said.

Finally, Microsoft's stock has shown it can "hold up like the Rock of Gibraltar" amid the Sino-American trade dispute and overall volatility in technology stocks, according to Wedbush.