MSFT - Microsoft: Superior Focus On Azure And ARPU Growth To Drive Outperformance

June, 28 2024 06:06 PM Microsoft Corporation

2024-06-28 18:06:22 ET

Summary

Microsoft's Azure, Google's GCP and Amazon's AWS make up 67% of the cloud infrastructure services market. As a mix of overall revenues, Microsoft has the highest gearing to cloud.
This greater focus on the Cloud business can continue market share gains and strong customer adoption. Azure may be the leader in the cloud vendor market in 3–5 years.
Copilot-driven ARPU growth can pave the way for multiple expansion as investors raise long-term growth expectations due to the sticky nature of Microsoft's enterprise productivity software.
Cloud gross margins are a key monitorable as a higher Azure sales mix can offset some of the pricing gains in the Office 365 products.
Relative technicals of MSFT vs S&P500 suggests a breakout of the weekly range, leading to a positive active return expectation.

Since my last article on Microsoft ( MSFT ) from January, the stock has generated an active total return vs the S&P500 ( SPY ) ( SPX ) of +0.18%:

Performance since Author's Last Article on Microsoft (Author's Last Article on Microsoft, Seeking Alpha)

...