Microsoft Q2 results could be 'major boost in the arm' for tech: Dan Ives
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Microsoft (NASDAQ:MSFT) is scheduled to report fiscal second-quarter results on Tuesday after the market closes, an event that Wedbush Securities believes could provide good news for the broader tech sector as a whole.
Analyst Dan Ives, who has an outperform rating and a $375 price target, notes that the company likely saw a "robust performance" in the quarter, led by strength in Azure and Office 365. He believes that Microsoft could beat revenue estimates by roughly 3%, with consensus estimates calling for $50.9 billion in revenue in $2.31 per share in earnings.

..."[T]aking a step back this will be a 'key print for the tech sector' to watch as investors remain very skittish on tech stocks with the Fed tightening/jawboning narrative coupled by Netflix's disaster guidance casting a dark shadow on the sector heading into this week," Ives wrote in a note to clients.
He added that Microsoft's (MSFT) pending deal to buy Activision (NASDAQ:ATVI) is a major bet for the company's consumer strategy over the next several years, "the underlying growth story is built around the game changing enterprise cloud transformation which is giving [Satya] Nadella & Co. clear tailwinds into 2022/2023."
Microsoft (MSFT) shares are down more than 4% on Monday to $283.59.
Ives also noted that Microsoft's cloud expansion is not slowing down anytime soon, as "large transformational" cloud deals are north of 50% and there is "clear momentum" in 2022 and the possibility it could take some market share away from Amazon's (NASDAQ:AMZN) Web Services. The concern that Microsoft could see some moderating growth in its cloud business is contrary to what Ives is seeing with these large deals.
"While we have seen the momentum of this backdrop in the last few years, we believe deal flow looks incrementally strong ... heading into CY22 as we estimate that Microsoft is still only ~35% through penetrating its unparalleled installed base on the cloud transition," Ives added, while also pointing out that the recent price increase for Office 365 could drive an additional $5 billion in revenue for the company this year.
Last week, Ives said that Microsoft (MSFT), along with Apple (NASDAQ:AAPL), were the "rock of Gibraltar" names that would keep tech stocks afloat.