Bernstein sees revenue lift for Microsoft’s Azure due to Desktop-as-a-Service

Bernstein notes that Windows was a very large driver of Microsoft revenue and a disproportionately larger driver of earnings, given its strong margins. But over time, Windows growth has slowed in comparison to other, faster-growing segments of Microsoft’s business. But the real upside opportunity, which the firm believes is not well understood, is the substantial revenue lift that is coming for Azure due to Desktop-as-a-Service as Windows follows enterprise workload loads to the Cloud. In fact, over the next 3-5 years, Bernstein expects that Desktop-as-a-Service could generate an additional $14B to $38B in Azure annual revenue growing over the long term to $75B to $100B in annual revenue. In addition, this shift of Windows to the Cloud will further stabilize and potentially grow Microsoft’s traditional Windows business, it adds. The firm has an Outperform rating on the shares with a price target of $398.