UBS: Microsoft is ramping up what may be its biggest profit machine yet

  • Microsoft plans to expand its margins in its cloud-computing-services business.
  • The Azure cloud-computing platform is said to drive much of Microsoft’s revenue growth in the next five years, according to UBS analyst Jennifer Swanson Lowe.
  • Microsoft is expected to rake in over $US50 billion in sales over the next five years.
  • Watch Microsoft’s real-time stock price here.

Microsoft may be upping investment in its biggest profit machine, the Azure cloud-computing service, Jennifer Swanson Lowe, a UBS analyst, said.

She sees Microsoft’s cloud-computing services adding $US57 billion in revenue over the next five years, with $US23 billion of that coming from Azure alone.

Lowe has a price target of $US105 for the stock, representing a 27.29% increase from its current level.

Companies are moving toward a so-called “digital transformation,” whereby they adopt technologies in order to stay relevant or ahead of the competition. Lowe sees upside for Microsoft’s Azure because more companies and individuals will eventually move towards the cloud.

In October, the company reported its commercial-cloud business hit $US20 billion in annualized revenue, a milestone that it was hoping to reach in 2018, due to Azure and its Office 365 productivity suite, which both operate under the cloud.

Microsoft is up 1.67% on Friday at $US83.87 per share. It has gained 34.04% this year.

To read more about how Microsoft’s cloud competition, Google and Amazon, is faring, click here.

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