Microsoft to get 'golden 1-2 punch' from cloud, AI, Wedbush says
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Microsoft (NASDAQ:MSFT) is slated to report fiscal fourth-quarter results on Tuesday and Wedbush Securities believes the tech giant will get a "golden 1-2 punch" from the cloud and artificial intelligence. 
Analyst Dan Ives, who has an outperform rating and per-share price target of $375 on Microsoft (MSFT), said the growth rate for Azure is the "key number" but a big beat is not something Wall Street is expecting. 
"In a nutshell, we expect a cloud beat for the June quarter along with generally optimistic commentary out of Microsoft towards cloud and AI spend and some cookie-cutter caution on the choppy and unpredictable macro," Ives wrote in an investor note, adding that Wall Street is expecting Azure to grow 26% in constant currency. Conversely, Ives said Azure could grow as much as 28% or 29%, given recent checks. 
Ives also said that Azure is gaining "incremental share" from Amazon (AMZN) AWS in the field and core enterprise cloud workloads are in the company's "backyard," as ChatGPT is now leading the AI path in the cloud world. 
Looking ahead to fiscal 2024, Ives is expecting Microsoft (MSFT) to boost capital spending due to the "transformational AI Gold Rush opportunity" the company is facing. 
"The Street is focused on what this cloud and AI growth opportunity looks like the next few years as we believe it ultimately blows the lid off the growth for Redmond the next few years" Ives added. "We estimate for every $100 of cloud spend with Microsoft the last decade there is $35-$40 of incremental AI spend now on the horizon for MSFT the next 3-4 years."
A consensus of analysts is expecting Microsoft (MSFT) to earn $2.55 per share on $55.48B in revenue.
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