Microsoft Has a Surging Business With a $50 Billion Sales Opportunity
Microsoft is king.

Microsoft (MSFT)  reported strong fiscal fourth quarter results after the close on Thursday, handily beating estimates on both the top and bottom lines. 

The Redmond, WA-based company reported earnings of 98 cents per share, or 75 cents without including the value of tax benefits from unwinding its mobile phone business, topping analysts' estimates of 71 cents per share. Revenue increased 13% year-over-year to $24.7 billion, also beating out Wall Street's estimates of $24.3 billion. 

Microsoft has been shifting its focus toward becoming a cloud computing giant that can compete with Amazon (AMZN) Web Services and Alphabet Inc.'s (GOOGL) Google Cloud. The company's Intelligent Cloud unit, which contains its Azure cloud platform and Windows Server product, saw sales jump 11% year-over-year to $7.4 billion, vs. analysts estimates of $7.3 billion.

Shares of Microsoft were trading down 0.6% to $73.79 early Friday afternoon. Here's what Wall Street is saying about Microsoft's latest big quarter. 

Keith Bachman, BMO Capital Markets (Outperform, $86 price target)

"There was a lot to like in Microsoft's (MSFT) Q4 results, and certainly reinforced our view that MSFT should be a core holding for a variety of investment styles. . . One concern we have heading into about every quarter is the balance of growth between Azure and server products."

Brent Bracelin, Pacific Crest (Overweight, $82 price target)

"Commercial cloud revenue increased 56% y/y to a $18.9B annualized runrate, which exceeded our forecast by ~$2B. The sheer size and accelerating pace of cloud growth increases our confidence in the bull-case scenario that Microsoft Cloud can quickly scale to north of a $50B segment by 2021."

Michael Turits, Raymond James (Buy, $84 price target)

"We reiterate our Strong Buy following a clean, across-the-board F4Q beat on strong cloud results and commercial bookings. . . We view the combination of cloud and on premise strength as part of a broader demand for hybrid on premise/off premise computing environments including VMW/AWS, Oracle Cloud Machine, and in Microsoft's case, the company's strategy of Intelligent Cloud/Intelligent edge that includes the newly launched Azure Stack."

Karl Keirstead, Deutsche Bank (Buy, $85 price target)

"Against very high Street expectations, MSFT posted a modest overall revs beat ($24.7b, +4% c/c ex-LNKD and slightly above our $24.6b estimate) and a modest adjusted EPS beat (GAAP EPS of $0.75 ex an unusual Phone tax benefit, above the $0.71 Street consensus) but the real upside came in the all-important Cloud business, with Azure growth accelerating to 97%, total Cloud revs growth ramping to 56% (and now 22% of the total mix) and Cloud GMs up a full 10 points to 52%. In our view the stock fade during the earnings call is attributable to the 1QF18 (September) quarter revs guide, which at $24.0b (+2%-3% ex-LNKD) fell short of our $24.6b estimate."

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