Microsoft saw a price target increase from one of its most ardent bulls on Wall Street, with Wedbush analyst Dan Ives arguing the software giant is poised to take more market share than Amazon in the next phase of cloud adoption.
The stock was falling 0.28% to $155.08 a share Tuesday, even as the broader market ticked slightly higher.
Ives raised his price target on the stock to $185 from $170, with the new price target representing 19% upside to the stock's current level.
"Based on our recent checks for fiscal year second quarter 2020 (Dec) in the field we continue to believe Microsoft remains in an enviable position heading into 2020," Ives wrote in a note on Tuesday. "Redmond is poised to win the majority of the next phase of cloud deployments vs. the likes of Amazon."
Other analysts have recently warned that Microsoft is catching up to Amazon Web Services. "Competitive pressure from Microsoft needs to be monitored," Tom Forte, analyst at D.A. Davidson & Co. recently told TheStreet, regarding Amazon's cloud business.
Amazon has been the market share leader in business cloud sales over the past several years, with Microsoft in second place. And while the cloud market has grown quickly, many analysts and industry experts see even more growth ahead as businesses and governments worldwide continue to adopt the service over traditional data storage methods.
Ives says 32% of business and government workloads currently use the cloud, but he sees that figure increasing to 55% by 2022.
In late October, Microsoft won the coveted JEDI contract with the U.S. Department of Defense to supply the agency cloud services, in a deal worth $10 billion over the 10-year life of the agreement. "JEDI is a microcosm of what we are seeing play out across the entire enterprise landscape; clearly Amazon and Bezos clearly won the first phase of cloud spending, but this next phase of cloud will be dominated by Redmond as it gains share and significantly narrows the gap over the coming years," Ives wrote.
Ives raised his target multiple for Microsoft on next year's earnings to 31 from just below 30.