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Microsoft has a massive opportunity to overtake Amazon Web Services thanks to the strength of its hybrid cloud business, analysts say (MSFT)

Despite slowing growth in the Redmond-based company's Azure cloud computing business, analysts lauded the fiscal first-quarter earnings Microsoft reported on Wednesday and said the company has a huge opportunity to compete with market-leading Amazon Web Services as more customers seek the so-called hybrid cloud.

"In a world increasingly moving to the cloud, but still encumbered by legacy investments that sit elsewhere and still drive value today, Microsoft is uniquely positioned to take an increasingly large percentage of corporate IT budgets in a hybrid world," RBC Capital Markets analysts wrote in a research note.

Microsoft on Wednesday reported a $10.7 billion profit on revenue of $33.1 billion, up 14 percent from the same period last year. The company's stock remained mostly unchanged immediately following the earnings release, but was trading up 2 percent to about $140 per share on Thursday.

Analysts called out Azure's revenue growth as a particular bright spot. JPMorgan noted Microsoft Azure's revenue growth for the quarter was higher than Amazon Web Services at a similar scale.

"Azure's cloud momentum is still in its early days of playing out with the company's massive installed base," Wedbush Securities analyst Daniel Ives wrote in a research note Thursday morning, who also spotlighted growth in Office 365 and LinkedIn. "This combination of dynamics is enabling Nadella to further transform [Microsoft] into a cloud behemoth over the coming years."

Microsoft said Azure revenue grew 59 percent, but the company doesn't report revenues figure specific to the business. Azure's growth rate dropped from 64 percent last quarter.

Most analysts seemed unfazed by the slowdown in growth, if they mentioned it at all — as the revenue base grows, it's likely unsurprising that the rate of growth goes down.

Credit Suisse noted Microsoft Azure had a "slightly faster deceleration in Azure" than expected, but said "surprise" growth in server products helped offset it.

Many analysts pointed to Microsoft Chief Financial Officer Amy Hood's comments on the earnings call that Azure had "material growth" in the number of $10 million-plus contracts, although she didn't share specifics.

Oppenheimer analysts in a research note wrote Microsoft's artificial intelligence offerings are a "key driver" for Azure. Nadella on the earnings call said Azure AI now has more than 20,000 customers and more than 85 percent of Fortune 100 companies have used it in the past year.

"We believe (Microsoft's) best-in-class hybrid cloud offerings will help it win market share in cloud," Oppenheimer analysts wrote in the note.

Analysts pointed to potential risks for Microsoft's future earnings, including cloud infrastructure and application competition from companies including Amazon Web Services and Salesforce.

Nadella, meanwhile, in an earnings call on Wednesday laid out his vision for the technologies that will take Microsoft past its $1 trillion valuation, including advancing the company's apps and infrastructure business and focusing on data and artificial intelligence.