02:48 PM EDT, 07/29/2024 (MT Newswires) -- Microsoft ( MSFT ) is expected to show stronger-than-expected results for the fiscal fourth quarter amid cloud computing platform Azure and artificial intelligence momentum, Wedbush Securities said on Monday.

The brokerage's checks point to a robust quarter driven by accelerating cloud deal flow that's expected to boost Azure's growth through the second half of calendar-year 2024 through 2025.

Wedbush analyst Daniel Ives reiterated an outperform rating and a $550 price target on the stock. The Redmond-based tech giant remains on the brokerage's best ideas list. Microsoft ( MSFT ) is scheduled to report results after the market closes on Tuesday.

Microsoft ( MSFT ) is expected to beat consensus views that Ives put at $64.37 billion for revenue and at $2.93 view for earnings per share, with intelligent cloud driving upside. Azure growth will be the most important metric of the quarterly report, he said.

Every $100 of cloud Azure spend over the last few years has led to an incremental $40 of AI spend for Microsoft ( MSFT ) looking ahead, according to Wedbush's estimates.

"We strongly view this as Microsoft's ( MSFT ) 'iPhone Moment' with AI set to change the cloud growth trajectory in Redmond the next few years and recent checks giving further confidence in this dynamic," Ives wrote.

The analyst forecast that more than 70% of Microsoft's ( MSFT ) installed base will ultimately be using AI-driven enterprise and commercial functionality within the next three years. "We believe the stock still has yet to fully price in what we view as the next wave of cloud and AI growth," Ives said.

Wedbush estimates that Copilot, the company's generative AI chatbot, could add another $25 billion to the company's top line by fiscal 2025. The cloud and underlying Office 365 and Windows ecosystem is set to comprise a bigger piece of revenue going forward, spurring accelerated growth and margins, Ives wrote.

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