Microsoft Poised for 10% Annual Growth Through Azure, LinkedIn

Dec 26, 2019
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Redmond-based software giant Microsoft Corporation (NASDAQ:MSFT) is another tech company that has had a great run on the stock market this year. Last year, on the 24th of December, Microsoft's stock price hit a new low of $92.61, when United States President Donald Trump speculated on firing Federal Reserve boss Jerome Powell. This, combined with statements made by the Treasury Secretary Steve Mnuchin's decision to convene a meeting of bank chief executives to ask them if their liquidity needs were being met sent the DOW, S&P500, and NASDAQ cruising on the edge of bear territory.

Microsoft is Set to See Growth in Azure, LinkedIn Next Year Believes Bank of America

Since then, Microsoft's stock has recovered magnificently, with the company trading comfortably at a 52-week high of $158.29 at the time of writing. However, this does not mark a peak for the stock, believes Bank of America as it raises its price target for Microsoft from $150 to $200 today. Take a look below for more details.

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In a note sent out to investors today, Bank of America has expressed optimism for Microsoft's future in addition to raising its price target for the company. The bank believes that Microsoft is set to demonstrate strong growth next year in Azure, LinkedIn, and gaming. In its first fiscal quarter for the year 2020, Microsoft (NASDAQ:MSFT) grew in nearly every sector that it operates in (except for the Surface lineup).

Azure, in particular, grew its revenue 59% year-over-year in the quarter, with revenue from Microsoft's Intelligent Cloud segment that Azure is a part of going up by 27% to $10.5 billion. Bank of America believes that the cloud segment has not fully matured. As a result, Microsoft has the chance to significantly improve its margins in the area next year.

Additionally, the bank also believes that revenue from Intelligent Cloud carries the potential to cross legacy server and Windows PC. Subsequently, Bank of America states that Microsoft can increase its overall revenue by 10% annually. The company earned $126 billion in revenue in its previous fiscal year, and it brought in $33.1 billion last quarter. Therefore, if Bank of America's estimates are correct, then Microsoft (NASDAQ:MSFT) will either post $139 billion in revenue this fiscal year, or it will post $36.3 in its first quarter of the fiscal year 2021.

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