Microsoft Corporation’s (MSFT) Azure cloud platform has been a transformative force, revolutionizing industries and spearheading digital transformations on a global scale. Trusted by an impressive 95% of Fortune 500 companies, Azure has solidified its position as the premier choice for cloud services. 

In its latest quarterly results, Microsoft’s revenue from Azure public cloud and other cloud services experienced a remarkable 31% annual growth, exceeding the 28% growth guidance. Within the Azure growth, 7 percentage points were attributed to AI services.

With Microsoft’s Azure becoming an increasingly popular choice among its customers and partners to build their own artificial intelligence (AI) solutions, Piper Sandler’s Brent Bracelin highlighted two tech stocks, Snowflake Inc. (SNOW) and MongoDB, Inc. (MDB), which could emerge as key beneficiaries of Azure's massive success.

Let’s take a closer look at these stocks. 

Tech Stock #1: Snowflake 

Commanding a solid market cap of nearly $51.9 billion, Montana-based Snowflake Inc. (SNOW) delivers a cloud-based data platform catering to diverse organizations across the U.S. and globally. Moreover, the company leverages AI to address business challenges effectively.

Snowflake stock has gained 7.2% over the past 52 weeks, though the shares are down about 20% in 2024

In terms of valuation, the stock is trading at 16.10 times sales, considerably lower than its five-year average of 43.9x. 

On Feb. 28, Snowflake reported its fiscal Q4 earnings, which beat Wall Street projections on both the top and bottom lines. Its revenue of $774.7 million rose 31.5% year-over-year, while its non-GAAP EPS of $0.35 jumped 150% annually, topping the Street’s estimates by a remarkable 98%. Moreover, product revenue for the quarter stood at $738.1 million, marking 33% annual growth. 

Despite the exceptional results, Snowflake sold off after the report on news that CEO Frank Slootman would transition to a chairman role. Since then, new CEO Sridhar Ramaswamy has lived up to his AI credentials by recently unveiling an OpenAI-based model for Snowflake’s enterprise clients.

For Q1, management foresees product revenue ranging between $745 million and $750 million, suggesting a 26% to 27% year-over-year improvement. In fiscal 2025, product revenue is expected to reach $3.3 billion, showcasing a 22% increase. Moreover, during this period, its adjusted free cash flow margin is projected to be 29%.

Analysts tracking Snowflake expect the company’s loss per share to narrow by 25.8% in Q1 and reduce another 7.7% in Q2. 

Snowflake stock has a consensus “Moderate Buy” rating. Out of the 41 analysts covering the stock, 25 suggest a “Strong Buy,” three advise a “Moderate Buy,” 11 analysts recommend a “Hold,” and the remaining two give a “Strong Sell” rating.

The average analyst price target of $205.76 indicates a potential upside of 28.8% from current price levels. However, the Street-high price target of 246 suggests a 53.8% upside potential.

Tech Stock #2: MongoDB 

New York-headquartered MongoDB, Inc. (MDB) provides a versatile database platform. Valued at $26.6 billion by market cap, the company’s offerings include MongoDB Atlas, MongoDB Enterprise Advanced, and Community Server. Additionally, the company offers professional services such as consulting and training. 

Shares of MongoDB have climbed 64.1% over the past 52 weeks, outperforming the broader S&P 500 Index’s ($SPX)gains of 20.6% during the same time frame. 

In terms of valuation, the stock is trading at 16.10 times sales, lower than its five-year average of 23.88x.

On March 7, MongoDB reported exceptional Q4 earnings results, exceeding Wall Street's predictions. Its total revenue rose 26.8% year over year to $458 million, outshining Wall Street’s projection by 5.2%. Non-GAAP EPS of $0.86 showed a remarkable 50.9% improvement compared to the previous year, and surpassed analysts’ estimates by an impressive 82.6%. 

MongoDB concluded fiscal 2024 on a high note, with notable achievements including 34% annual growth in Atlas revenue. CEO Dev Ittycheria emphasized MongoDB's growing presence as the standard for modern application development, citing ongoing success in securing new workload wins. Looking ahead to fiscal 2025, the company plans to invest in key product development and go-to-market strategies to capitalize on long-term growth opportunities.

For Q1, management predicts revenue to range between $436 million and $440 million, while non-GAAP EPS is projected to arrive between $0.34 and $0.39. In addition, for fiscal 2025, the company expects revenue roughly between $1.90 billion and $1.93 billion, with non-GAAP EPS between $2.27 and $2.49. 

MongoDB stock has a consensus “Moderate Buy” rating. Out of the 29 analysts offering recommendations for the stock, 20 recommend a “Strong Buy,” three suggest a “Moderate Buy,” four advise a “Hold,” and the remaining two give a “Strong Sell” rating.

The average analyst price target of $442.21 indicates a potential upside of 15.3% from current price levels. However, the Street-high price target of $550 suggests a notable 43.4% upside potential.