Is Microsoft the best cloud stock? Wedbush’s Ives thinks so

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jun 25, 2021
  • Dan Ives says Microsoft Corp is free from regulatory overhang.
  • The Wedbush analyst sees a a trillion-dollar opportunity in Cloud.
  • Wedbush Securities has a price target of $325 on Microsoft.

Microsoft Corp (NASDAQ: MSFT) has been in the headlines in recent days as it became the world’s second $2 trillion company after Apple Inc. Investors have been picking their favourites between the two tech giants this week.

Dan Ives’ comments on CNBC’s “The Exchange”

Wedbush’s Dan Ives opined that Apple currently faces a $20 per share overhang, regulatory and Epic lawsuit battle combined. In comparison, Microsoft is free from regulatory overhang. On CNBC’s “The Exchange”, Ives said:

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“It comes down to Cloud. Microsoft is the best way to play the cloud trade right now. It’s only a third of the way through the cloud transformational upgrade cycle. So, there’s a trillion-dollar opportunity on Cloud alone over the coming years. $325 is our price target based primarily on cloud growth and talents that we’re seeing in digital transformation.”

In related news, Microsoft announced the much-anticipated Windows 11 on Thursday. The latest edition of its operating system will come with an updated UI and will be compatible with Android apps.

Dan Gallagher agrees there’s no regulatory overhang for Microsoft

During the same interview on CNBC, Dan Gallagher of the Wall Street Journal agreed that Microsoft didn’t have to worry about regulatory overhang for now. He, however, added that the $2 trillion valuation, success in the Cloud space in recent years, and improving margins have raised the stakes for Microsoft.

“They have to keep putting up really strong numbers to keep the stock going up. And some of the moves they’ve been making lately, including being more vocal to get more regulatory pressure on their competitors like Google, I do think they now run the risk of getting back in the crosshairs.”

Gallagher acknowledged Amazon as one of the biggest rivals of Microsoft in the Cloud segment. So, if Bezos’ company, which comes under criticism a lot, he said, faces restrictions in the future that disables its expansion in this space, Microsoft could benefit from that.  

A quick overview of the Microsoft Stock

MSFT is currently about 0.5% down on the intraday chart. Including the price action, it is now exchanging hands at $265 per share versus $218 per share at the start of the year. The American multinational performed largely upbeat last year with an annual gain of roughly 40%. At the time of writing, the Nasdaq-listed firm is valued at $2 trillion and has a price to earnings ratio of 36.05.

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