Early on Wednesday, Microsoft (MSFT) signed a multiyear deal to offer cloud-computing services to AT&T (T). Microsoft will be AT&T’s “preferred cloud provider for non-network applications.” AT&T plans to become a “public cloud first company by migrating most non-network workloads to the public cloud by 2024.” The deal is worth more than $2 billion. At 3:10 PM ET, Microsoft stock rose 0.13% for the day, while AT&T stock fell 0.60%. AT&T’s and Microsoft’s current market cap is $245.1 billion and $1.1 trillion, respectively.
Microsoft’s cloud deal with AT&T
According to a CNBC report, “AT&T will use the company’s Azure infrastructure and move most of its employees to the Microsoft 365 package of productivity apps and security services.” The report also said, “The deal is not exclusive, and AT&T is permitted to use other cloud providers in addition to Azure.” On Tuesday, AT&T signed a deal with IBM that involves cloud migration.
The deal is a major win for Microsoft. The company is fighting to gain market share from Amazon Web Services—the biggest provider of public cloud services.
Microsoft will likely report its quarterly earnings results on Thursday. Microsoft expects to report an adjusted EPS of $1.21 on revenues of $32.8 billion. The quarter ended on June 30. AT&T is expected to report an adjusted EPS of $0.89 on revenues of $44.8 billion on July 24. Read How Will AT&T’s Q2 Results Stack Up Against the Competition? to learn more.
Most of the analysts maintained a “buy” on Microsoft stock before its quarterly earnings results. Among the 36 analysts that follow the stock, 91.7% recommended a “buy,” 5.5% recommended a “hold,” and 2.8% recommended a “sell.” On average, analysts have given the company a 12-month target price of $147.47, which implies a rise of 7.6% from its closing stock price of $137.08 on Tuesday.
As of Tuesday, AT&T and Microsoft stocks have risen 17.7% and 35.0% year-to-date, respectively. AT&T stock is trading 25.3% above its 52-week low of $26.80 per share and 2.3% below its 52-week high of $34.37 per share.