Microsoft could reach $1 trillion in valuation sooner than you think: Analyst

Apple, valued at $870 billion, is the closest to it. Microsoft is worth $650 billion now.

  • Published: December 12, 2017 12:24 PM IST

The world might be close to getting its first trillion-dollar corporation. And unsurprisingly, it would be from the world of tech. Early November, Apple crossed $900 billion in valuation briefly, and is largely expected to be the first to reach that magic figure. But close on its heels is Microsoft, which according to a Wall Street analyst, could be worth $1 trillion by 2020 — if not sooner. Microsoft is currently worth $650 billion or thereabouts.

But Wall Street analyst Kirk Materne reckons that its valuation would be propelled by strong growth in Microsoft’s Azure cloud business and Office 365 suite of business software, CNNMoney reported. It would require the software-maker’s stock to climb about 55 percent from current levels for it to cross the trillion-dollar valuation mark. While that is steep, it isn’t entirely impossible. Silicon Valley and even Wall Street seems to have embraced Microsoft’s “cloud-first” strategy that is being driven by CEO Satya Nadella.

The estimates may not be entirely out place given Microsoft’s stock has risen almost 35 percent in 2017 alone, and has climbed more than 200 percent in the past five years. That is better than the stock performance of Apple (which is valued at $870 billion now) and Google-parent Alphabet (valued at $725 billion). Since Nadella took over from Steve Ballmer in 2014, Microsoft has been able to stage a stunning turnaround focusing on core business areas like cloud. Its biggest there is Amazon Web Services (AWS) whose near-monopolistic presence in cloud is making “enterprise customers” wary.

Hence, these big customers might choose to partner with Microsoft or Google for cloud services instead of using AWS. “The Amazon ‘death star’ phenomenon is a growing point of discussion in the enterprise market. Amazon’s ambitions in certain industries are now having a real impact on how certain enterprises think about AWS as a potential vendor,” Materne stated. Amazon, incidentally, is valued at $560 billion, and is the running for a $1 trillion valuation as well. Only time will tell which of the Big Four — Apple, Alphabet, Microsoft, Amazon — reaches there first!

  • Published Date: December 12, 2017 12:24 PM IST