Microsoft buys CloudKnox to boost Azure cloud security: time to invest in MSFT stock?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Jul 22, 2021
  • Microsoft said Wednesday it acquired CloudKnox Security.
  • The company wants to offer unified privileged access and cloud entitlement to its Azure customers.
  • CloudKnox follows recent acquisitions, RiskIQ, and ReFirm Labs in MSFT’s growing portfolio.

US technology giant Microsoft Corporation (NASDAQ:MSFT) continued its investment in cloud security after announcing the purchase of CloudKnox Security on Wednesday. The Washington-based office software maker said it wants to offer unified privileged access and cloud entitlement management.

CloudKnox Security is a leading Cloud Infrastructure Entitlement Management (CIEM) offering organizations complete visibility into privileged access. 

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This acquisition will help Microsoft’s Azure clients to reduce risk through offering right-sized permissions and consistently enforcing least-privileged principles. CloudKnox will also support Microsoft’s network of security measures by employing continuous security analytics to prevent security breaches and implement compliance.

Why buy Microsoft shares in Q3 2021?

Even without this acquisition, Microsoft was still one of the top stocks to buy in August 2021. Therefore, the strategic purchase of CloudKnox security becomes part of MSFT’s exciting growth story.

The rapid rise in cloud adoption in the corporate world attracts all types of cyber threats. To counter the risks associated with database breaches, companies must invest heavily in cloud security software. Microsoft’s continued investment in this segment of the cloud computing market will make its cloud services offered through Azure stand out in the market.

The company said:

Our acquisition of CloudKnox, like our recent acquisition announcements on RiskIQ and ReFirm Labs, shows our focus and execution in acquiring, integrating, and expanding the strongest defenses for our customers — from chip to cloud.

The $2 trillion company’s shares trade at a P/E ratio of 38.30, making the stock attractive to value investors. Therefore, MSFT stock is still a buy despite rallying nearly 30% this year.

Source – TradingView

Technical overview: Microsoft stock price forecast for August 2021

Technically, Microsoft shares appear to have rallied closer to overbought conditions after this week’s rebound. However, the MSFT stock traded well into overbought levels several times this month, meaning it could still extend gains.

Therefore, investors can target extended rebound profits at approximately $290 or higher at $300. The key support levels are $272 and $261.

Bottom line: the catalyst for MSFT shares in Q3 2021

Microsoft reports its fiscal Q3 results early next week. The company consistently outperforms analyst expectations, meaning the same could happen. Thus, MSFT’s stock price could receive a boost, leading to more upward movement.

Therefore, although MSFT shares have gained significantly this year, they seem to have more room to run ahead of earnings.

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