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Barron's predicts that Microsoft shares could rise 30% in the next 18 months

Dec 21, 2015, 23:02 IST

Microsoft CEO Satya NadellaBusiness Insider/Julie Bort

Microsoft stock could rise as much as 30% over the next 18 months, mostly on the back of its successful and growing cloud business, according to Barron's.

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With Microsoft trading around $54 per share, as of market close on Friday, that would mean that the tech giant would hit around $70 per share by mid-2017.

Barron's points out, correctly, that while the Microsoft Azure cloud business is growing, it's still lagging behind Amazon's $7 billion Amazon Web Services giant.

But because the market for cloud computing - where Microsoft's lucrative enterprise customers can enter a credit card number and get access to functionally unlimited supercomputing power - is so huge, there's still a lot of potential for Microsoft to stake out a lucrative business for itself.

Plus, under CEO Satya Nadella, Microsoft has done a good job broadening out its Microsoft Office business, using the Office 365 cloud productivity suite to reach customers on non-Microsoft platforms like the Mac, iPhone, and Android.

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All of which is good, because it provides some much-needed diversification of business for Microsoft, amid a shrinking PC industry. It gives the company some runway and some paths to growth, even as the traditional Windows and Office software businesses decline.

Of course, Barron's has something of a mixed track record when it comes to making calls on Microsoft stock, and investors don't seem to be taking its latest prediction as gospel: Microsoft shares remained pretty stable at $54.81 when the markets opened on Monday.

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