Microsoft Gaining Ground As Alternative To Amazon Web Services

Microsoft‘s (MSFT) Azure cloud computing platform is gaining ground as an alternative to Amazon.com‘s (AMZN) Amazon Web Services, one analyst says.

“Heavy investments from Microsoft now appear to be paying off this year, based on positive feedback from channel partners that were more skeptical of Azure six months ago,” Pacific Crest Securities analyst Brent Bracelin said in a report late Thursday. “One partner called 2017 ‘The Year of Azure’ based on increasing level of interest and activity.”

Bracelin reiterated his overweight rating on Microsoft stock with a price target of 70.

Microsoft was up 0.6%, near 65, in afternoon trading on the stock market today. The stock has formed a flat base over the last seven weeks with a buy point of 66.01.

Microsoft is doing especially well with large enterprise customers because it offers products that span on-premise and cloud environments, Bracelin said.

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The migration of enterprise information technology from on-premise hardware to cloud-based services is still in the early innings, he said.

“While AWS has a multiyear lead in IaaS (infrastructure as a service), we see higher potential for Azure to become an upside lever for Microsoft this year and argue it has unparalleled product breadth across both applications and infrastructure within on-premise and public cloud environments,” Bracelin said.

Azure has an estimated $2.5 billion annual run rate. Microsoft’s overall commercial cloud business, which also includes Office 365 and Dynamics Online, is on a $14 billion run rate, he said.

Those figures are small compared with total annual tech spending, including communications, of $1.3 trillion, Bracelin said.

“The shift to cloud could be a decade-long tailwind for Microsoft, AWS and Google,” he said. Alphabet (GOOGL)-owned Google is a distant third in the cloud computing market.

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About Cloud 9 Infosystems

Cloud 9 Infosystems is an Azure Circle Partner specializing in building, migrating and managing applications in Cloud. We were awarded the Most Valuable Partner Award by Microsoft for our Cloud services. We are also part of Azure insider club and P-seller program at Microsoft.
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