Microsoft A Bright Spot In 'Dark Storm': Why Wedbush Says All Eyes Will Be On Cloud Giant After The Bell

Microsoft Corp MSFT is set to report Tuesday after the bellas earnings season shiftsinto high gearand all eyes will be on the print.

What To Know: Wedbush was out with a new note on Microsoft ahead of the company's quarterly results. The firm maintained itsOutperform rating onthe stock.

"The whole Street [will be]watching carefully as this is one of the best barometers of overall cloud and enterprise spending," Wedbush analysts wrote in a new note to clients.

The analyst firm will be focused on Microsoft's cloud segment and the underlying Office 365/Windows ecosystem. Wedbush believes cloud is becoming a bigger part of the Microsoft story and will ultimately lead to better growth and improved margins.

"We believe the shift to cloud is still less than 50% penetrated and represents a massive opportunity forNadella & Co. going forward despite the dark storm clouds forming for FY23 in the uncertain macro backdrop," Wedbush said.

The economic outlook remaineddim as the Federal Reserverepeatedlyreaffirmed its 2% inflation goaland even discussedrisks associated with a potential pivot.The headline CPI was up6.5% in December, downfrom 7.1% in November andin line withaverageeconomist estimates. It's unclear how the Fed will respond but manyexpect the central bank to continue to raise rates.