Notwithstanding the negative press surrounding the acquisition of Activision Blizzard (NASDAQ:ATVI) by Microsoft (NASDAQ:MSFT), investment firm Wedbush Securities said on Friday that the computer giant is likely to conclude the transaction.
While circumstances have improved for the firm headed by Satya Nadella, analyst Dan Ives, who has an outperform recommendation on Microsoft stock, highlighted that more recent checks have been performed on Microsoft than in prior weeks.
Ives noted in a note to clients that although the macro is certainly a worry for CIOs attempting to navigate an uncertain IT spending environment, several bigger cloud platform transactions have been given the green light for Redmond, which is a plus so far this quarter and for 2023. Consequently, Ives increased his price estimate for Microsoft stock to $290.
Ives continued by saying that cloud budgets for clients are “largely in place” and that any indicators of deals being pushed out have “steadied” over the previous month.
The analyst also said that even though Azure’s growth has slowed from levels seen in the past, the company is still tracking ahead of the low 30% growth goal it set and is most likely witnessing some share gains.
Cloud deals in the financial space could be smaller than expected because of increased scrutiny compared to the past. Still, this weakness is being offset by strength from federal spending, as competitors Amazon, Google, Oracle, and IBM are seeing a “surge” in activity from the government.
Ives said that concerning the purchase of Activision, despite the current regulatory issues, the agreement would “ultimately triumph” in both the United States and Europe, with the Call of Duty producer coming into Microsoft’scoffers by the end of the summer. Even though the deal has been the subject of recent regulatory concerns, this was stated.
Microsoft stock said on Tuesday that it has reached agreements with Nintendo and Nvidia to port Xbox and Activision titles to those companies’ consoles and computers, respectively.
Featured Image: Unsplash @ wocintechchat