People have been dropping the line “in the driver’s seat” for more than 100 years now and they’re not about to slow down.
The phrase, meaning to be in charge or in control, was also the title of a 1974 movie starring Elizabeth Taylor as well as a 1978 song by Sniff ‘n’ the Tears.
And analysts recently used the term to describe Microsoft’s (MSFT) dominance when it comes to deploying AI in the cloud.
Cloud AI, or AI as a Service, is an integration that enables users to access AI tools and capabilities via the cloud.
AIaaS makes the processing of large datasets easier, enabling businesses to uncover patterns and insights and make data-driven decisions.
AI is now a key player in cloud operations, according to cloud security provider Wiz, which Alphabet (GOOGL) recently said it would acquire for $32 billion.
Microsoft CEO Satya Nadella.
Microsoft CEO: we doubled data center capacity
Two-thirds (67%) of cloud environments are using OpenAI or Microsoft’s Azure OpenAI SDKs, up from 53% last year, Wiz said in its study, “The State of AI in the Cloud 2025.”
Microsoft holds roughly 49% of OpenAi.
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Microsoft will launch its first cloud region in Malaysia with three data centers by midyear, nearly a year after it unveiled a $2.2 billion investment in the country, Reuters reported.
The Malaysia West cloud data centers will be located around Kuala Lumpur and will start operations in Q2, Laurence Si, managing director of Microsoft Malaysia, said at a news conference.
Microsoft is set to report its Q3 results in April. The Redmond, Wash., company topped Wall Street’s forecasts in January, but its shares fell after growth in Azure cloud computing services fell short of expectations. And its quarterly revenue forecast disappointed investors.
“Azure is the infrastructure layer for AI,” Satya Nadella, chairman and CEO, said during the earnings call. “We continue to expand our data center capacity in line with both near-term and long-term demand signals.”
“We have more than doubled our overall data center capacity in the last three years, and we have added more capacity last year than any other year in our history,” he added.
Analyst: Microsoft a table-pounder name
Wedbush analyst Daniel Ives said in a March 19 research note that Microsoft shares have been pressured as worries about AI-driven growth and competition created a perceived overhang on the name.
To the contrary, the analyst said, Wedbush’s recent checks with customers and partners in the Microsoft ecosystem showed an acceleration of deal flow this quarter. That gives the investment firm incremental confidence in the Azure growth story over the coming quarters.
Microsoft shares are down 8% year-to-date and nearly 9% from a year ago.
“Over the last month in our numerous conversations with Microsoft customers, partners, and field checks, it has become crystal clear to us that the monetization opportunities around deploying AI in the cloud is a transformational opportunity across the industry with Redmond remaining in the driver’s seat,” Ives said.
Related: Analyst overhauls Microsoft stock price target amid potential AI pivot
[“This] is the next step on the AI strategic vision for Microsoft and we would not be surprised to see an accelerated M&A strategy to help drive this next software AI stack layer,” Ives said.
AI annual recurring revenue continues to track ahead of expectations, and Ives said Microsoft’s selloff is a stark contrast to what it is seeing taking place in the field.
“We estimate for every $100 of cloud Azure spend with MSFT the last few years, there is an incremental $40 of AI spend for Nadella & Co. looking ahead,” he added.
Ives affirmed an outperform rating and $550 price target on the shares, saying Microsoft is a table-pounder name to own at current valuations and one of the best ways to play the AI revolution theme.
Scotiabank analysts initiated coverage of Microsoft with an outperform rating and $470 price target, TheFly reported.
The investment firm cited the company’s “position as a leading horseman of the AI revolution.” The analyst said that would drive sustainable fundamental growth and account for nearly 60% of incremental revenue in fiscal 2027.
Scotia said that it expected 2025 to be “a paradigm-shifting year during which customer investments accelerate in AI on Azure and Microsoft 365 Copilot.”
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