With the size of the total addressable market [TAM] for public cloud in the hundreds of billions of dollars, combined with multi-year deals, momentum and secular growth trends, it’s likely that Azure can help boost Microsoft’s (NASDAQ:MSFT) earnings considerably.
Weiss added that a shift towards faster growing and “more durable” consumption can help Azure sustain growth, continue to be the leader in the hybrid cloud, and grow its market share along with its platform-as-a-service, existing relationships and wide array of distribution
For Office 365, which recently underwent a price increase, it’s about rising prices, but also the ability to add more tools and give customers a value benefits such as the continued enhancements made to Teams, Power Business Intelligence and Power Apps, and increased security.
It also comes down to growing seat licenses, including getting front-line workers access, Weiss explained.
Weiss noted that total Commercial Office revenue, which includes the non-Office 365 version of Office, could reach $60 billion in 2026.
Security, ever-present in a world where cyberattacks are increasing due to geopolitical issues, is also an important factor for Microsoft (MSFT). Security has helped generate $15 billion in related revenue for Microsoft (MSFT) over the past 12 months, and it’s likely that this will grow as threats remains high and the company sees gains from enterprise spending Weiss said, according to a previous survey.
Weiss noted that with Microsoft’s (MSFT) strength in the cloud, it is in a strong position to improve content and expand its community, which should position gaming as a strong revenue generator for Microsoft in the long term.
The final two growth drivers are LinkedIn, which Microsoft (MSFT) bought in 2016, and Dynamics. Weiss said that since Microsoft (MSFT) acquired LinkedIn, its revenue has nearly tripled, as the business-focused social network has grown in B2B advertising, hiring, training and learning and more.
Dynamics is likely to help Microsoft (MSFT) address changes in the business environment, by expanding its portfolio of applications. Though it only accounted for 2.3% of Microsoft’s 2021 revenue, it could grow in the mid-20% range in the near term, Weiss said.
Earlier this month, Wedbush Securities said Microsoft (MSFT) was among the top tech stocks to buy amid the recent sector sell-off due to its “significant free cash flow.”