- Ahead of Microsoft Corp’s (NASDAQ:MSFT) Q4 results, Credit Suisse analyst Phil Winslow says that he expects Azure to remain the primary focus of investors, and his confidence in its growth remains high.
- His conviction held good despite investors’ concerns of a deteriorating economy potentially resulting in decelerations in growth for Azure and Office commercial, supply chain issues negatively impacting Windows, and FX translation headwinds.
- Specifically, his channel checks indicate that recent price increases and continued delivery uncertainty of hardware equipment have further accelerated the transition from the on-premises capital investment model to -as-a-Service spending. He also saw Azure disproportionately benefiting, as the “enterprise cloud,” from the accelerated shift to the public cloud.
- Although the past +24 months triggered faster adoption of cloud infrastructure, demand for Azure capacity continuing to grow faster than supply reinforced his thesis that 2022 and 2023 will be defined by businesses moving forward on multi-year, “strategic” cloud-first transformation roadmaps.
- He, therefore, believes upside exists to consensus constant currency growth forecasts for Azure.
- He expects Azure to continue to narrow the revenue gap to #1 Amazon.com Inc (NASDAQ:AMZN) AWS and widen the gap to #3 Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) Google Cloud.
- Winslow has an Outperform rating and a price target of $400 on the shares.
- Price Action: MSFT shares traded lower by 3.26% at $250.39 on the last check Tuesday.
- Photo by Rainer Stropek via Flickr
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