Microsoft Is Becoming 'King of the Cloud,' Poised to Overthrow Amazon Web Services
KeyBanc analysts said Microsoft Corp (MSFT) - Get Microsoft Corporation Report will dethrone Amazon.com (AMZN) - Get Amazon.com, Inc. Report Web Services to become the "king of the cloud" this quarter.
Analysts reiterated an "overweight" rating and increased their price target for the software giant to $82 from $78. The new target implies a 10% upside from Thursday's closing stock price.
Microsoft's commercial cloud revenue increased 56% year over year, which exceeded KeyBanc's estimates by about $2 billion. "The sheer size and accelerating pace of cloud growth increases our confidence in the bull-case scenario that Microsoft Cloud can quickly scale north of a $50 billion segment by 2021."
TheStreet Recommends
KeyBanc lowered GAAP earnings per share estimates, writing that outsized growth in cloud investments "more than justifies" a higher stock-based compensation that will put pressure on margins.
Microsoft stock was slightly up in premarket trading.
More of What's Trending on TheStreet:
- History Doesn't Always Repeat, and Keep Tech in Your Portfolio: Market Recon
- The 5 FANG Stocks of the Dotcom Era -- and Where They Are Now
- Bored With Cream and Sugar? You Can Now Add Weed to Your Morning Joe
- Consuelo Mack: There Are Many More Women Getting Into Financial Journalism
- BMW Has One of the 10 Hot New Luxury Cars Priced Over $100,000 That You Could Buy Today
- Quiz: Which Company Makes Your Favorite Junk Food?
