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Sabre's (SABR) Next Cloud Migration to be Aided by Microsoft

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Sabre Corporation (SABR - Free Report) recently announced that it has entered into a long-term agreement with Microsoft (MSFT - Free Report) , as a part of its strategy to move its services to the cloud. Per the agreement, Microsoft will aid Sabre in migrating its commercial application’s to the tech gaint’s cloud platform — Microsoft Azure.

The move is anticipated to assist Sabre in creating new business opportunities and simultaneously enhancing customer experience. With this agreement, Sabre will be able to apply Microsoft Azure’s artificial intelligence (AI) and advanced analytics techniques to its existing database, consequently facilitating it in creating “new services for hotel, agency and airline customers.”

For the last few months, the company has been aggressively transitioning itself to cloud. Prior to this agreement, Sabre entered into a similar type of agreement with Amazon’s (AMZN - Free Report) Amazon Web Services.

Earlier in February this year, the company launched the pilot program of its previously developed AI chatbot with one of its travel agency. The bot, which is built on Microsoft’s Bot Framework and Microsoft Cognitive Services tools, was introduced to help travel agencies better serve their customers for routine services and requests.

The company believes that its cloud strategies will result in escalation of near-term operating expenses. Notably, during the latest quarterly report, adjusted operating income declined 6.3% year over year to $197.6 million. The company cited increased spending in technology related operating expenses as the main reason behind the decline.

Nonetheless, growth opportunities associated with cloud makes it sensible for Sabre to invest in this space. The company believes that shifting to cloud will create new revenue opportunities and improve cost savings in the long run.

Zacks Rank & Other Stocks to Consider

Currently, Sabre carries a Zacks Rank #2 (Buy).

NVIDIA (NVDA - Free Report) , another top-ranked stock in the broader computer & technology sector, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for NVIDIA is currently pegged at 10.25%.

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