Microsoft (MSFT) plans to build four more data centers in China by early 2022 to add to the existing six it already operates in the country, according to a Bloomberg report citing confidential sources. The planned additional facilities are part of the company’s efforts to expand its cloud computing capacity across Asia.
The global demand for internet services increased during the COVID-19 pandemic. Microsoft seeks to take advantage of this with capacity expansion. The company aims to double its intelligent cloud capacity in China in the coming years.
Microsoft has a local partner that operates its data centers in China. Its existing six data centers in the country are managed by a company called 21Vianet, according to Bloomberg.
Chinese companies are increasingly migrating to the cloud after being slow to do so in past years, and Microsoft is expecting a boom in data storage and management demand. China’s cloud market is expected to reach $46 billion in 2023. Microsoft’s commercial cloud revenue for the quarter ended March 31 increased 33% to $17.7 billion. (See Microsoft stock chart on TipRanks)
Tigress Financial analyst Ivan Feinseth recently reiterated a Buy rating on Microsoft stock with a price target of $303. The analyst’s price target implies 16.14% upside potential.
Feinseth believes that ongoing digital transformation will add growth to Microsoft’s profit, leadership position, and revenue.
Consensus among analysts is a Strong Buy based on 26 Buys. The Microsoft average analyst price target of $297.96 implies 14.20% upside potential to current levels.
MSFT scores a “Perfect 10” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.