Chief executive, Satya Nadella, has made cloud computing a clear focus through 2015, with Microsoft's Azure and Office 365 products. The business one of the company's fastest-growing areas, with revenues up 8 percent to $5.9 billion in the quarter ending September 30.
Microsoft's success in the cloud pushed Goldman Sachs to raise its price target for the stock to $57 from $45 earlier this month and upgrade it to "neutral" from "sell."
"The company has been successfully transitioning its Office-installed base to Office 365, is the no. 2 leader in cloud services behind Amazon Web Services and has shown strong operating expense discipline and capital allocation," Goldman Sachs wrote in a research note.
While Microsoft is behind Amazon's cloud division, analysts are bullish on the potential for the Redmond, WA-based company to be a big player in 2016.
"We continue to believe 2016 will be a '206 area code street battle for the cloud,' with Microsoft firmly best positioned as the vendor to compete with AWS on the enterprise cloud front for years to come," FBR Capital Markets wrote in a note this week.