Shares of Microsoft Corp. (MFST) were up 0.4% to $111.39 on Monday after a Wedbush Securities analyst added the stock to the firm's "best ideas" list.

Analyst Daniel Ives said that "Microsoft remains in an enviable position heading into the next 12 to 18 months on the heels of its cloud success and is firing on all cylinders around its Office 365 and Azure strategic vision based on our recent checks in the field," Ives wrote. "With roughly 30% of workloads in the cloud today and poised to hit 55% by 2022, we believe (CEO Satya) Nadella & Co. are in the catbirds seat to get more of these complex workloads (e.g. AI, machine learning, etc.) as more enterprises take the leap to a hybrid cloud architecture over the coming years."

Ives also said that Microsoft's Azure is "starting to close the gap" with Amazon.com Inc.'s (AMZN) - Get Report  AWS, which is considered the market leader. Ives maintained his outperform rating and $140 target on Microsoft shares.

Azure is a cloud computing service created by Microsoft for building, testing, deploying, and managing applications and services through Microsoft-managed data centers.

Ives said he believes a defining moment for the "cloud arms race" will be the announcement of the winner of the Pentagon's JEDI contract, likely to to be in early April, which is roughly worth $10 billion over the next decade.

Microsoft in late January reported fiscal second-quarter earnings of $1.08 a share on revenue of $32.5 billion. Intelligent cloud revenue, which encompasses the Microsoft Azure cloud and other related products, was up 20% from the period a year ago, totaling $9.38 billion.

Microsoft declined to disclose exact revenue for the Azure cloud business, but the company did say Azure grew 76%, which is flat sequentially from the previous quarter.