Microsoft's Azure Might Have Hit An Inflection Point Ahead Of Q4 Results

As Microsoft Corporation MSFT approaches its July 20 fourth-quarter earnings report, the tech giant’s Azure cloud platform could have arrived at a positive turning point, according to Credit Suisse.

A survey completed by the firm shows that 40 percent of respondents said Azure is their preferred cloud platform, up from 21 percent six months ago, analyst Michael Nemeroff said in a Monday note.

Credit Suisse maintained an Outperform on Microsoft and raised its price target from $80 to $84.

Microsoft has “significant” earnings potential in the coming years on the basis of commercial cloud growth and higher cloud gross margins due to economies of scale, Nemeroff said.

Credit Suisse projects that Microsoft will notch $24.296 billion in revenue in the fourth quarter against a Street estimate of $24.265 billion.

Windows, Office 365 Usage Up

Office 365 and Windows 10 have been adopted by 38 percent and 27 percent, respectively, of respondents to Credit Suisse’s enterprise software survey, according to the firm.

This represents an increase from survey results in January, Nemeroff said.

“Further, we highlight that 36 percent still plan to upgrade to O365 within 24 months,” he said.

Ten percent of respondents told Credit Suisse than an upgrade was a priority but have not set a date, “which gives us increased confidence in our O365 MAUs forecast of $160 million in [fiscal 2019].”

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