Microsoft and Oracle's Cloud Growth Potential Amid Market Pullback
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: NASDAQ.COM
- Microsoft Cloud Growth: Microsoft's cloud revenue reached $54 billion in the latest fiscal quarter, reflecting a 29% year-over-year increase, indicating that despite supply constraints, Azure's 40% growth remains unaffected by competition, showcasing the company's strong position in the cloud market.
- Copilot User Surge: Microsoft 365 Copilot paid seats have exceeded 20 million, representing a 250% year-over-year increase, which indicates a rapidly growing demand for AI assistants among enterprises, further solidifying Microsoft's market share in the AI sector.
- Oracle Debt Risks and Opportunities: Oracle's long-term debt has surged 71% over the past two years to $159 billion; however, management does not expect to issue new debt beyond 2026, potentially setting the stage for a stock rebound, especially as cloud services continue to show robust growth.
- Cloud Services Contract Growth: Oracle's remaining performance obligations grew 325% year-over-year to $553 billion, demonstrating a long-term commitment from enterprises to AI, providing high visibility into future demand and supporting the company's $90 billion revenue forecast for fiscal 2027.
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Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 419.090
Low
500.00
Averages
631.36
High
678.00
Current: 419.090
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company. The Company develops and supports software, services, devices, and solutions. The Company’s segments include Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services. This segment primarily comprises: Office Commercial, Office Consumer, LinkedIn, and Dynamics business solutions. The Intelligent Cloud segment consists of server products and cloud services, including Azure and other cloud services, SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs), and Nuance and GitHub; and Enterprise Services, including enterprise support services, industry solutions and Nuance professional services. The More Personal Computing segment primarily comprises Windows, Devices, Gaming, and search and news advertising.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Cloud Business Driving Revenue: The Microsoft Cloud platform serves as a primary revenue source, with businesses relying on its scalable IT infrastructure, creating stable recurring revenue and making it difficult for clients to switch to other providers, thereby enhancing Microsoft's market position.
- New Opportunities in AI: Microsoft's AI business surpassed a $37 billion annual revenue run rate in fiscal Q3 2026, reflecting a 123% year-over-year growth, which is expected to drive revenue growth back to over 20% in future quarters.
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- Cloud Business Driving Revenue: The Microsoft Cloud platform serves as a primary revenue source, with businesses relying on its scalable IT infrastructure, creating stable recurring revenue and making it difficult for clients to switch to other providers, thereby enhancing Microsoft's market position.
- New Opportunities in AI: Microsoft's AI business surpassed a $37 billion annual revenue run rate in fiscal Q3 2026, reflecting a 123% year-over-year growth, which is expected to drive revenue growth back to over 20% in future quarters.
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See More
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- Microsoft Valuation Decline: Microsoft’s stock has dropped over 20% from recent highs, with a current market cap of $3.1 trillion, indicating a valuation low during a heavy capital investment cycle in AI, which may affect investor confidence.
- Cash Flow Assessment: Evaluating Microsoft’s stock using cash from operations reveals its lowest valuation since 2019, suggesting a significant retraction that reflects market caution regarding future growth prospects.
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See More
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- Acquisition Boosts Growth: The acquisition of software company Mirantis by Iren aims to enhance customer attraction and secure higher margins in the long run, further solidifying its competitive edge in the AI infrastructure sector.
- Revenue Forecast Raised: Iren anticipates achieving $3.7 billion in annual recurring revenue by year-end, indicating strong momentum in the market, especially as its 5-gigawatt pipeline becomes operational.
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See More
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- MaxLinear Growth Momentum: MaxLinear reported a 43% year-over-year revenue increase in Q1, with its infrastructure segment growing 35%, and CEO forecasts profitability by 2026, indicating its crucial role and growth potential in AI infrastructure.
- Innodata Customer Diversification: Innodata announced a new contract with a major tech company expected to generate $51 million in revenue this year, contributing to a 54% year-over-year increase in Q1 revenue, showcasing success in diversifying its customer base.
- Market Expansion Strategy: Iren recently entered European markets and plans to expand into the Asia-Pacific region, while MaxLinear and Innodata are also enhancing their market shares, indicating their significance and growth potential in the global AI ecosystem.
See More
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- Evolving Partnership: Microsoft is distancing itself from OpenAI, updating their partnership agreement multiple times, which indicates a strategic shift towards diversification to reduce reliance on ChatGPT and enhance market competitiveness.
- Diverse Customer Needs: Microsoft's cloud servers support various AI models, with CEO Nadella noting that over 10,000 customers have utilized multiple models, including 5,000 using open-source options, showcasing the company's flexibility and adaptability in meeting customer demands.
- Competitive Market Advantage: By offering a selection of AI models, Microsoft mitigates the risk of choosing a single winner in a highly competitive AI landscape, which is expected to enhance customer satisfaction and increase market share.
- Investment Opportunity: Despite a 13% drop in Microsoft's stock this year, advancements in AI technology and the introduction of the Copilot assistant add value to its products, and with a reasonable P/E ratio, it presents a strong opportunity for long-term investors, positioning the company for better growth ahead.
See More
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- Strong Earnings Coverage: With a diluted earnings per share of $2.39 reported in its latest quarterly results, Nvidia can easily cover a year's worth of dividend payments, showcasing its robust financial health and potential for continued growth.
- Yield Comparison: Although Nvidia's dividend yield stands at approximately 0.47%, which is still below the S&P 500 average of 1.1% and Microsoft's 0.87%, it surpasses Apple's 0.35%, indicating its competitive position among tech stocks.
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See More
