Microsoft Stock: Solid Cloud Strategy Could Lift Microsoft Corporation (MSFT) Stock

  • Microsoft is boosting its cloud computing services in Europe, and high profile government and corporate clients are signing up.
  • The company released a book titled "A Cloud for Global Good" with a public policy roadmap and recommendations for governments.
  • Next-generation Microsoft cloud services include AI applications. The Microsoft cloud could be "the first AI supercomputer.".

Microsoft (NSDQ:MSFT) CEO Satya Nadella and president Brad Smith embarked on a four-day European tour to meet with business and government leaders, and promote the company's cloud computing services in Europe. Microsoft, which has invested over $3 billion in Europe to date, announced that it has more than doubled its cloud capacity in Europe in the past year, and intends to deliver Microsoft Cloud to European customers from data centers in France, starting in 2017.

"We continue to invest heavily in cloud infrastructure to meet the growing demand from European customers and partners," said Nadella. "Building a global, trusted, intelligent cloud platform is core to our mission to empower every person and organization on the planet to achieve more. There’s never been a better time for organizations across Europe to seize new growth and opportunity with the Microsoft Cloud." See the Microsoft news release for a video recording of Microsoft's announcement webcast.

Also Read: Microsoft Corporation (MSFT) Stock Looks Set To Breach $60

The Redmond giant is betting big on cloud computing and cloud services for the enterprise. "We're creating technology that becomes essential but invisible, to help you build something amazing - whether you need on-demand scalability, technology to connect your people, or real-time data insights," states the Microsoft Cloud website. "The Microsoft Cloud is designed to empower your business, so you can do more and achieve more."

The Microsoft Cloud includes Azure, Office 365, and Dynamics 365. The company hopes to persuade its enterprise customers to migrate to the cloud, with an increasing range of business critical options. With this objective in mind, Microsoft has been boosting in-house development capabilities and acquiring specialized companies such as the Israeli cloud security company Adallom, and Metanautix, a company specialized in data management for business analytics, with an "intelligent cloud" strategy in mind.

Key corporate and government clients for Microsoft cloud services in Europe are the UK Ministry of Defence (modernization of information technology via Azure and Office 365), the Renault-Nissan Alliance (next-generation connected services for cars powered by Azure), Ireland’s Health Service Executive (health services in the cloud via Azure, Office 365 and Dynamics 365), and German automotive components company ZF (Azure-powered data platform).

In Dublin, Microsoft also announced, on the first day of the European tour of Nadella and Smith, the release of the book "A Cloud for Global Good," which includes a policy roadmap and details 78 public policy recommendations in 15 categories to help make cloud technologies more trusted, responsible and inclusive. This sounds like the language used by European bureaucrats in Brussels, and European politicians are known to relate (at least in theory) to these concerns, which seems to indicate that Microsoft intends to expand its government services to continental Europe.

"Cloud computing has the potential to solve some of our world’s most challenging issues, but, as with all technological advancements, it raises important questions for society," said Smith. "We must work together to build a cloud for global good. Our hope is that the ideas shared in this book will help move technology forward while ensuring no one is left behind."

ZDNet notes that Microsoft's cloud computing offering features a new wave of applications that use Artificial Intelligence (AI) and Machine Learning (ML) technologies. Therefore, the Microsoft cloud can be considered as "the first AI supercomputer."

"Ultimately the cloud is about powering the next generation of applications," said Nadella. "It is always the next generation applications that have driven infrastructure and when we look at this current generation of applications that people are building, the thing that is going to define these applications, that characterizes these applications, is machine learning and artificial intelligence. Therefore we are building out Azure as the first AI supercomputer."

Also Read: Microsoft Corporation Is Closer To Its 'Cloud First Mobile First' Dream

AI supercomputing and ML are pursued by other tech giants as well, as indicated by the recent International Business Machines (NYSE:IBM) announcement of a new AI supercomputer, powered by NVIDIA (NSDQ:NVDA) Graphical Processing Unit (GPU) technology, used in US government centers for AI and ML applications. Microsoft has similar applications in mind. "When you think about machine learning, especially deep neural nets, it turns out GPUs are much better at performance and scale for those algorithms," said Nadella.

Building in-house AI supercomputing hardware facilities and software is very costly. Therefore, it seems likely that many companies and governments, wishing to take advantage of scalable AI supercomputing for critical applications - such as Big Data and machine understanding - at an affordable cost, will choose Microsoft cloud services. Investors should continue to consider Microsoft as a solid tech stock.

Looking to buy tech stocks? Check out our top stock picks from the sector.

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