The Microsoft Analyst
Piper Sandler analyst Brent Bracelin reiterated an Overweight rating and $352 price target for Microsoft shares.The Microsoft Thesis
Microsoft’s Cloud segment climbed 32 percent year-over-year to $23 billion in the March quarter, defying the fluid and dynamic economic conditions, analyst Bracelin said in a note. Azure, the company’s public cloud computing platform, saw revenue growth accelerating from 46 percent in the previous quarter to 49 percent, the analyst noted.Azure’s adoption and consumption, the analyst said, remained strong in the quarter.
The Microsoft management noted that the number of Azure deals valued at over $100 million more than doubled from a year ago.
The analyst estimates that Azure now makes up 23 percent of the total revenue on an annualized run rate as opposed to a mere 7 percent in 2018.
“Bear concerns that all cloud software witnessed a temporary benefit post-COVID but could face a sharp moderation this year proved to be too pessimistic,” Bracelin said.
The analyst noted that the broader Cloud group has shed a whopping 41 percent since November, with their valuation at a four-year low. If other cloud leaders report similar resiliency, it could mean near-term cloud risks are overstated.
Microsoft chief Satya Nadella said on the call that technology spending as a percent of enterprise revenue could double by the end of the decade, Bracelin noted.
All these suggest “cloud software eating the world' mantra might still have legs.”
