A Wall Street analyst lays out the three core businesses that will help Microsoft continue its huge growth spurt

A Wall Street analyst lays out the three core businesses that will help Microsoft continue its huge growth spurt

Satya Nadella

  • A Wall Street analyst said Microsoft is riding a growth wave, thanks to the momentum of three core businesses: its cloud platform, Office 365 and its suite of business applications
  • Morgan Stanley's Keith Weiss said Microsoft Azure, the tech giant's cloud business, is poised to lead the emerging hybrid cloud trend - where businesses have infrastructure that spans both their own data center and massive mega-clouds like Microsoft Azure.
  • He also said the company could potentially see more growth in its enterprise applications business which he said are "one of the most important parts of the Microsoft story."
  • Click here for more BI Prime stories.

Microsoft, the most valuable company in the world, has been riding a growth wave, which is poised to keep rolling, a Wall Street analyst said this week.

The tech behemoth is getting a huge lift from three core businesses - its growing Azure cloud business, its range of subscription-based cloud products, and its suite of business applications - which Morgan Stanley analyst Keith Weiss said should lead to "durable double-digit top line growth."


Microsoft's cloud business, Azure, continues to gain momentum, and could propel the company to a leading position in a key market trend, the rise of the hybrid cloud.

"Ultimately, Microsoft remains the best positioned name in tech for the emerging hybrid cloud architectures," Weiss told clients in a note.

Cloud computing has made it possible for businesses to set up their networks in web-based platforms, allowing them to scale down or even abandon private data centers, which leads to huge cost savings. That market is dominated by Amazon, Microsoft and Google, with Microsoft Azure taking a strong second-place position against Amazon Web Services.


A new trend, called hybrid cloud, has also emerged for businesses that choose to move some segments of their network to the cloud, while also maintaining huge chunks of their data and applications in private data centers.

Microsoft's strong presence in the two realms - private data centers and the cloud - is giving the company an edge in this market, particularly with businesses that are unable or reluctant to complete move to the cloud, Weiss said.

"Customers have varying plans and timelines for their digital transformation initiatives," he said. Many Microsoft customers "can confidently invest" in the company's products geared to private data centers, while exploring options to use Azure, he said.


Microsoft's cloud momentum was underscored in July when, for the first time since it launched in 2015, its cloud business posted more revenue than its other key businesses, including Office and Windows.

"We are more confident in the durability of growth, as we were consistently reminded [that] we are in the early days of the large opportunity," Weiss said.

Microsoft's flagship Office 365 business, combined with Windows 10 and and its enterprise mobility and security unit, also remains strong, Weiss said. Those products are packaged together into one subscription-based business, called Microsoft 365.


The growth of the Microsoft 365 business was highlighted by expanding average revenue per user for Office 365, Weiss said.

Weiss also cited gains from the tech giant's suite of business applications, which includes LinkedIn, the professional social networking platform, Linkedin; Microsoft Dynamics, its line of enterprise business applications; and Power Platform, which enables businesses to build customized software in the cloud with a minimum of coding required.

Weiss highlighted the potential gains from these products which said are "one of the most important parts of the Microsoft story."


The $1.1 trillion company's shares have climbed more than 35% year-to-date. It was last up nearly 2% on Wednesday at $139.53.

Got a tip about Microsoft or another tech company? Contact this reporter via email at bpimentel@businessinsider.com, message him on Twitter @benpimentel. You can also contact Business Insider securely via SecureDrop.

Get the latest Microsoft stock price here.