Shares of legacy tech titan Microsoft Corp. (MSFT), already up 13.3% year-to-date (YTD) and nearly 50% over the most recent 12 months, compared to the S&P 500's 18% gain over the same period, are poised to surge higher on continued strength in enterprise spending, according to one team of bulls on the Street. (See also: Microsoft to Hit $1 Trillion by 2019: Canaccord.)

On Monday, Deutsche Bank lifted its price target on shares of the Redmond, Washington-based company from $115 to $120, reflecting an approximate 24% upside from Tuesday morning at $96.90.

The upbeat note comes after Deutsche Bank's Karl Keirstead visited the 43-year-old tech pioneer's headquarters, where executives were meeting with a group of investors last week. He indicated that he left the meeting more upbeat on the firm's prospects, particularly as a main beneficiary of a "three year super cycle" in enterprise buying, and not just cloud computing use, as reported by Barron's.

Satisfaction Azured

The analyst, who rates MSFT at buy, wrote that management touted the firm's "hybrid cloud" approach, or its ability to support both on-premise data centers and public cloud computing with Azure. Keirstead also noted that executives said they would allow customers to buy a unique licensing of server products, wherein they can pay for their data center license and then move it over to Azure. "This implies that a) Azure discounting could be greater than what we/investors see by monitoring per-unit list prices and b) the lines between Microsoft’s Azure and on-premise Server Product businesses are blurring somewhat," wrote the Deutsche analyst.

Keirstead also applauded Microsoft's "Azure Stack" took, which he believes helps differentiate its service against leading public cloud player Amazon.com Inc. (AMZN) with Amazon Web Services (AWS) and Alphabet Inc.'s (GOOG) Google Compute Cloud. While customers are entering "very large Azure deals," Deutsche suggests that the platform is still in its early days, citing a source outside the company that indicated that "the notion that Azure is now about 1/3 the size of AWS (based on our estimates) felt 'high.'" (See also: Amazon Eclipses Microsoft in Market Value: A 1st.)

Digital Transformation

While over 90% of enterprise workloads remain on-premise, the "desire to modernize" infrastructure has now outpaced any drag from the move to the public cloud model, wrote Keirstead. Further, if the notion of a three-year supercycle in enterprise IT spend "is even remotely accurate, this current rally in enterprise tech stocks may have plenty of room to continue."

He sees other positive drivers as the recently passed GOP corporate tax cuts, which he says should trickle down to IT spend, amid the backdrop of an improving economy after the 2008–09 recession which caused "anemic" spending in enterprise IT for years.

"Technology is indeed becoming a greater competitive weapon, moat and productivity lever in many industries (motivating many to 'digital transform')" wrote Keirstead, who sees the prospects for a revival in enterprise IT spend as justifying software stocks' peak valuation multiples.