Microsoft
MSFT
recently announced a multi-year collaboration with The Proctor & Gamble Company (P&G). As part of the deal, Microsoft will co-innovate with P&G to accelerate and expand the latter’s digital manufacturing platform.
Leveraging Microsoft Azure, AI and Internet of Things solutions, P&G will accommodate the volatility in the consumer products industry with scalable, agile and efficient solutions based on market conditions to ensure faster product delivery and customer satisfaction and improve productivity while reducing costs.
Over the past few years, Microsoft has doubled down on its cloud computing opportunity. The latest partnership is expected to strengthen its competitive position in the cloud computing market.
However, the company has lost 19.3% in the year-to-date period compared with the Zacks
Computer – Software
industry’s decline of 20.4%. Meanwhile, the
Computer and Technology
sector has tumbled 23.2% year to date.
Microsoft Corporation Price and Consensus
Microsoft Corporation price-consensus-chart
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Microsoft Corporation Quote
Expanded Customer Base To Aid Top-Line
The adoption of cloud computing has further been accelerated by the pandemic. Cloud-specific spending is expected to increase significantly in the near term. Per a
Markets and Markets report
, the global cloud computing market is expected to grow at a CAGR of 16.3%, reaching $947.3 billion in 2026. These trends bode well for cloud solution providers such as Microsoft.
The company has been focusing on upgrading and innovating its cloud offerings. Microsoft’s Azure continues to draw in customers. Per management, the number of $100 million-plus Azure deals more than doubled year over year in the third quarter.
Recently, Microsoft partnered with
Accenture
ACN
and their joint venture, Avanade, to help organizations manage their sustainability challenges.
Leveraging Microsoft’s Cloud, Accenture Sustainability Services and Avanade’s human-centered digital experience, the strategic partnership will help organizations address industry-specific sustainability challenges.
American Airlines also partnered with Microsoft to use Azure as its preferred cloud platform for its airline applications and key workloads. This will significantly accelerate the airline’s digital transformation, making Microsoft one of the largest technology partners of the airline.
Earlier this year, leaders across different industries such as Lufthansa Technik, BlackRock and Bridgestone have moved their SaaS platform to Microsoft Azure.
These developments are expected to drive the subscriber base, which in turn is anticipated to bolster top-line growth in the near term. In the last reported quarter, the Intelligent Cloud segment revenues were up 26% (same percentage at cc) year over year, at $19.051 billion. In the ongoing quarter, Microsoft expects overall Azure revenues to be driven by strong growth in the consumption business.
Microsoft faces stiff competition in the addressable market from the likes of
Amazon
’s
AMZN
Amazon Web Services (AWS) and
Alphabet
’s
GOOGL
Google Cloud
AWS reported revenues of $18.4 billion, up 37% year over year over year growth, in the first quarter of 2022. Recently AWS launched its AWS Mainframe Modernization, a new service that makes it faster and easier for customers to modernize mainframe-based workloads by moving them to the cloud. It has already been adopted by the likes of TCS, Infosys and CGI.
Alphabet-owned Google Cloud revenues rose 43.8% year over year to $5.8 billion in the last reported quarter. Google Cloud recently extended its multi-year partnership with Nansen, a blockchain data analytics platform. The collaboration will enable Nansen’s Web3 investors with real-time access to high-quality market intelligence, thereby helping them make informed decisions.
Per the latest
Canalys report
, AWS accounted for 33% of the global cloud spending in first-quarter 2022, sustaining its leading position in the cloud market. Microsoft’s Azure came in second, accounting for 21% of the worldwide cloud spending. Google Cloud took the third position, representing 8% of the cloud spending.
To combat competition, Microsoft, which carries a Zacks Rank #3 (Hold), changed its licensing terms, which allows it to charge higher prices from customers for using its software in rival clouds.
You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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