Microsoft jumps as tech giant delivers 'cloud guidance ... heard around the world'
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Microsoft (NASDAQ:MSFT) may have calmed the nerves of tech investors on Tuesday when it reported better-than-expected third-quarter results and delivered guidance that will be "heard around the world."
Wedbush Securities analyst Dan Ives, who rates Microsoft (MSFT) outperform with a $340-per-share price target, noted that the guidance provided by Satya Nadella and team was "one for the ages" and should help calm the fears of investors.
"Microsoft's earnings with a close eye, Nadella & Co. gave a robust cloud guidance "for the ages" that will calm Street nerves this morning and was a bullish data point for [Microsoft] and importantly the whole tech sector moving forward," Ives wrote in a note to clients, adding that enterprise, cloud and cyber security continue to see "massive growth." 
Microsoft (MSFT) shares rose more than 5% to $283.92 in premarket trading on Wednesday.
Redmond, Washington-based Microsoft (MSFT) Chief Financial Officer Amy Hood said that for the company's fiscal fourth quarter, it expects sales to be in a range of $52.4 billion to $53.2 billion.
During the third quarter, Microsoft (MSFT) said it earned $2.22 per share on $49.4 billion in revenue, thanks to a 32% year-over-year rise in cloud-related revenue. The $2.22 in quarterly earnings included a $0.03 drawdown due to foreign exchange fluctuations and a $0.01 drawdown due to its acquisition of Nuance Communications.
A consensus of Wall Street analysts estimated the company would earn $2.20 per share on $49.05 billion in revenue during the period.
Bank of America analyst Brad Sills, who rates Microsoft (MSFT) buy with a $365-per-share price target, noted that Azure accelerated growth from last quarter, going to 49% in constant currency, up from 46% in the previous quarter and Azure's strong guidance shows cloud computing is not slowing down anytime soon. 
"Guidance for 47% [constant currency] Azure growth [suggests] continued momentum in large deals and no consumption headwinds," Sills wrote in a note to clients. 
Sills also highlighted the company's strong free cash flow growth of between 18% and 20%, Office 365 results and continued growth in margins, making it the firm's "top defensive pick" in "a challenging environment." 
Citi analyst Tyler Radke noted that Microsoft's (MSFT) strong commercial bookings performance and the fact that all of its segments came in ahead of Wall Street expectations suggest that the company has "resiliency" going forward.
On Monday, Wedbush Securities said the results from Microsoft (MSFT) and Apple (AAPL) "could dictate the path of tech stocks over the coming months."