Microsoft Could Win Next Phase Of Cloud Battle, Wedbush Says

Recent field checks indicate that Microsoft Corporation MSFT retains its strong position heading into 2020, backed by its success in providing Cloud solutions, according to Wedbush.

The Analyst

Wedbush’s Daniel Ives maintained an Outperform rating for Microsoft, while raising the price target from $170 to $185.

The Thesis

Microsoft has made significant progress in its strategic vision for Office 365 and Azure, Ives said in the note.

He added that checks with enterprise customers and partners had indicated “a clear acceleration of larger and more strategic enterprise cloud deals.”

The analyst believes that Microsoft seems well positioned to capture the lion’s share of the next phase of cloud deployments even versus Amazon.com, Inc. AMZN, which clearly won the first phase of cloud spending.

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The shift to cloud is a “major secular trend” and Microsoft could continue to benefit from this through 2020 and beyond, Ives said. He expects workloads in the cloud to increase from around 32% currently to as much as 55% by 2022.

“The cloud story at MSFT is showing no signs of abating as Azure and the secular shift among enterprises to MSFT’s cloud platform is accelerating into 2020 with higher margin cloud sales opening up the next phase of growth (e.g., Office 365 migrations),” Ives wrote.

MSFT Price Action

Shares of Microsoft were down 0.39% at $154.91 at the time of publishing on Tuesday.