Microsoft could gain 27% on cloud-computing upside that's only begun to scratch the surface, says Wedbush

• Microsoft stock could gain 27% in the next year as the shift to cloud-computing in workforces continues, said Wedbush.
• Analysts say Microsoft has only begun to scratch the surface of its installed user base for cloud computing.
• Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Microsoft stock has plenty of upside ahead as the shift to cloud computing has only just begun, according to Wedbush securities.

In a Tuesday note, a team of senior tech analysts maintained their "outperform" rating for Microsoft and price target of $300, a roughly 27% upside from current levels.

Shares of Microsoft have dipped roughly 4% in the last month as investors have rotated out of mega-cap growth stocks and into cyclical stocks that hinge on the re-opening of the economy. But Wedbush expects certain trends that were accelerated by the pandemic - remote work and cloud computing - to not only stick around after the vaccine is rolled out, but to continue to grow.

The analysts see cloud-driven IT growth in 2021 to surpass that of 2020 as workforces "rip the band-aid off in digital transformations" and upgrade their cloud computing as remote work will be here to stay. Microsoft will "disproportionately benefit" from this because of its installed user base for Azure, its cloud computing service.

"We believe this disproportionally benefits the cloud stalwart out of Redmond, as Nadella & Co. are so well positioned in its core enterprise backyard to further deploy its Azure/Office 365 as the cloud backbone and artery," the analysts said.

They added that while they have seen momentum of this cloud-computing shift in the last few quarters, the rest of 2021 looks strong as Microsoft is only about 35% through "penetrating its unparalleled" installed base.