Microsoft (MSFT, Had an excellent 2021 and there are signs there will be no letdown in 2022 either. At least that’s the opinion of Wedbush’s Daniel Ives.
“We believe large transformational cloud deals at MSFT are north of 50% with clear momentum in 2022 and there could be some incremental share gains from AWS as well,” the 5-star analyst said.
Ives’ comments come after an investigation into the December quarter, in which the tech giant showed “incremental strength again” with the Azure cloud growth story “hitting its next gear of growth.”
Contrary to Wall Street’s expectation of “moderating” cloud growth after WFH’s trend eases, Ives thinks deal activity in the area indicates “digital transformation” is not over, and that Microsoft will see “~43% growth.” Azure Whisper keeps increasing numbers to beat. This quarter.”
Only 35% of Microsoft’s “unique installed base” has so far converted to the cloud. Additionally, with remote working still expected to play a bigger role in the coming years, Ives thinks this trend benefits the company “disproportionately.”
The analyst estimates that by the end of 2022, enterprise workloads on the cloud will increase to 55% from 43% currently. That would naturally be a boon to rivals AWS and others like Google and IBM as well, although according to Ives, none are as well positioned to reap the rewards as Microsoft.
In addition, the analyst believes there could be “another $5 billion+ incremental tailwind” this year due to the “strategic poker move” of Office 365 price increases.
Despite “multiple/valuation compression and a tight Fed background,” Ives believes the Street is still underestimating the “underlying” Microsoft growth story and expects the stock to rise over the next 6 to 9 months. will continue at the highest level. “We believe MSFT is on its way to a $3 trillion market cap over the next 12 months,” summarizes the 5-star analyst
As such, in Ives’s “Preferred Technical Stock for 2022”, the analyst rates MSFT as an outperform (i.e. buy) and supports it with a $375 price target. Investors are looking at a one-year gain of 22%, should Ives’ forecast go according to plan. (To see Ives’ track record, click here,
Except for one skeptical, given the consensus breakdown, all other analyst reviews are positive, culminating in a strong buy rating from analysts on the Street. The average target of $373.91 is practically the same as Ives’ objective. (See Microsoft Stock Forecast on TipRank)
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Disclaimer: The opinions expressed in this article are those of featured analysts only. The content is to be used for informational purposes only. It is very important to analyze yourself before making any investment.