Dan Ives, Wedbush Senior Technology Analyst, is bullish on Microsoft thanks to its “unparalleled” advantages in cloud transition.
Microsoft’s Azure platform is currently in second place in the cloud market, behind AWS. In spite of that, Azure has been growing rapidly, outpacing the market at large. In particular, Microsoft has been making headway at the expense of AWS and third-place rival Google Cloud.
Ives doesn’t see that stopping, thanks to the unique position Microsoft is in, in combination with continued work-from-home trends.
“Deal flow looks strong heading into the rest of FY21 as we estimate that Microsoft is still only ~35% through penetrating its unparalleled installed base on the cloud transition,” Ives said, according to Markets Insider. “To this point, 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.”
As a result of these factors, Ives sees the company’s stock hitting $260 per share next year, an increase of 16% over the current price.
“From a valuation basis, even if we take a 10%+ haircut to the cloud and enterprise growth drivers, we are still looking at what we value as a $1 trillion valuation cloud franchise for Redmond,” he added.