Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

TD Cowen on Microsoft : 'No shortage of demand for Azure and AI workloads'

Published 02/21/2024, 10:20 PM
Updated 02/21/2024, 10:20 PM
© Reuters.

TD Cowen analysts reiterated an Outperform rating on Microsoft (NASDAQ:MSFT) and the price target of $455, citing continued demand for Azure and AI workloads.

“In Azure, demand trends are stabilizing, spend on new workloads is resurfacing and healthy backlog is driving confidence in growth & share gains. In AI, customer projects are early, breadth of demand is building & MSFT seems to be capitalizing on competitive advantages,” the analysts said in a note on Wednesday.

Importantly, Microsoft is witnessing a shift in customer behavior, TD Cowen noted.

Initially hesitant to allocate savings towards new workloads and premium services due to macroeconomic conditions, customers are now: “1) returning to investing in new workloads; 2) creating new AI budgets to spend on Azure; and 3) building up a stronger backlog of new projects to tackle,” they wrote.

“We get the sense this is helping to build a larger & more visible level of pipeline for Azure, giving mgmt confidence in the durability of Azure growth.”

MSFT also believes that Azure AI is not only increasing engagement with existing customers but also drawing in new ones.

In the December quarter, the tech giant reported approximately 53,000 customers using AI services, with a third new to Microsoft's platform.

This underscores the success of the company’s AI initiatives in attracting fresh customers and enhancing their infrastructure-as-a-service (IaaS) market share.

“Moreover, mgmt believes that customers are very early in their AI journey, with POCs/pilots in early ramp mode and breadth of customer interest building nicely,” TD Cowen analysts said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.