Only a handful of key players dominate the cloud sector, and Microsoft (NASDAQ:MSFT) is undeniably one of them. Moreover, the company has taken the genAI opportunity by the horns and is already seen as a leader in the space.
Looking ahead, Wells Fargo analyst Michael Turrin forecasts continued growth for Microsoft’s Azure cloud platform in F2H25.
“MSFT is a leader & share gainer in cloud infra & we believe set to benefit from a significant AI-enabled product cycle forming,” the analyst said. “See favorable setup ahead as incremental server/GPU supply coming online drives AI-led Azure re-accel in 2H.”
Microsoft is expecting double-digit revenue and operating income growth in FY25, an objective Turrin thinks is “achievable.” Despite rising COGS expenses due to a significant increase in Capex over the past year, the tech giant anticipates only single-digit OpEx growth in FY25 that will act as a “key offset.”
Meanwhile, recent disclosures show that Azure has been growing by 35% year-over-year (constant currency, and at a $60 billion run rate) in June 2024 (vs. the previously reported 30%), outpacing its competitors, Amazon’s AWS at 19% and Google’s GCP at 29%.
Although Turrin thinks it may take some time for M365 Copilot to have a significant impact on revenue, he still believes Microsoft’s AI productivity assistant has the potential to more than double its already substantial Office business (over $55 billion). Early demand indicators have been promising, with daily active users doubling sequentially in the June quarter, and Turrin is expecting “strong adoption over time.”
“Still see good Office growth ex-Copilot too, as MSFT picks up market share in adjacent areas comms, collab, and security,” the analyst went on to add.
With all the above to come, Turrin has now added the stock to Wells Fargo’s Signature Picks, while he keeps his Overweight (i.e., Buy) rating and $515 price target intact. The figure suggests shares will climb 26% higher in the months ahead. (To watch Turrin’s track record, click here)
Turrin’s take is hardly a controversial one on Wall Street. In fact, all agree MSFT stock is one to own, with Buys only – 31, in total – naturally making the consensus view a Strong Buy. The average target is only slightly lower than Turrin’s objective; at $504.91, the figure makes room for 12-month returns of ~23%. (See Microsoft stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
