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Microsoft joins Apple in an exclusive club for $ 2 trillion

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Microsoft has taken its place in the history books, as only the second public company in the United States to reach a market value of $ 2 trillion (approximately 1.48,50,100 kroons) supported by betting, its dominance in cloud computing and enterprise software will be expanded even further in the post-coronavirus world.

Shares rose 1.2% on Tuesday in New York, enough for the software company to join briefly Apple as one of only two companies to trade at such a high value before closing pennies under the $ 265.51 mark (approximately Rs 19,700). Saudi Aramco briefly broke that threshold in December 2019, but currently has a market value of about $ 1.9 trillion (approximately 1.41, 13.490 kroner).

Since taking office in 2014, CEO Сатя Надела transforms the Washington-based company in Redmond into the largest vendor of cloud computing software, taking into account both its infrastructure and Office cloud applications. Microsoft is also the only one of the largest US technology companies to have so far escaped the recent wave of control by increasingly active US antitrust regulators, giving it a freer hand in both acquisitions and product expansion.

Microsoft will open a new data center region in Spain, expanding its strategic partnership with Telefonica SA, Telefonica said in a statement. Microsoft has earned 19 percent so far this year, surpassing Apple and Amazonas investors accumulated expectations for long – term growth in both profits and revenue and expansion in areas such as machine learning and cloud computing. The company’s third-quarter results, published in late April, exceeded expectations and showed strong growth in its business segments.

The Nasdaq 100 index outperformed the S&P 500 on Tuesday after Federal Reserve Chairman Jerome Powell reaffirmed his view that inflation would be short-lived. Both benchmarks extended profits after Powell’s comments, with the Nasdaq 100 closing 0.9% and the S&P 500 closing 0.5%.

Microsoft has “a lot of hands and is doing well: games, cloud, automation, analytics, AI,” said Hillary Frisch, senior research analyst at Clearbridge Investments. “This is an attractively valuable name in technology and should benefit both from the opening up of the economy and from a more pronounced change to the cloud.”

Co-founder in 1975 from Bill Gates and Paul Allen, Microsoft created the personal computer software industry and dominated the computer operating system and Office software for years. As Internet browsers such as Netscape became increasingly important in the 1990s, Microsoft competed to introduce its own product that came with Windows software. This led to an antitrust lawsuit filed in 1998 by the US government, and in 2000 a federal judge found the company guilty.

Allen, who co-founded Microsoft with his fellow billionaire Bill Gates and used the wealth he earned from the iconic technology company to invest in professional sports teams, cable television and real estate, has died. He was 65.

Although Microsoft is avoiding the collapse of its business, the punishment the government initially sought in the antitrust case, over the next decade the software maker largely missed the advent of mobile software, social media, and Internet search, lagging behind newer competitors such as Google and more nimble like Apple. With a series of strategic changes, over the past seven years Nadela has brought Microsoft back to the forefront of technology with a focus on the cloud, mobile computing and artificial intelligence.

While it took Microsoft 33 years of IPOs to reach its first $ 1 trillion (approximately 74,233,000 kroner) worth in 2019, the next trillion took just about two years amid rising popularity of technology stocks before COVID-19 pandemic and during the health crisis. Apple made history on Wall Street when it reached $ 2 trillion (approximately Rs. 1.48,50,100 crore) last year.

Among the American names, the pair is tracked by Amazon, which has a market capitalization of nearly $ 1.8 trillion (approximately Rs. 1,33,61,130 crores), and Alphabet, which is estimated at about $ 1.6 trillion (approximately Rs. 1,18,76,560 crores).

“Microsoft is testing all the fields: in the markets that investors prefer, it offers strong and sustainable growth and remains very well positioned to take advantage of the long-term global trends we see in technology,” said Logan Perk, an analyst at Edward Jones. An estimate of $ 2 trillion (approximately Rs. 1,48,50,100 crore) “is justified given how it turned towards the cloud and remains attractively valued, even given the strong results.”

According to data collected by Bloomberg, more than 90 percent of analysts recommend buying Microsoft, while no one has the equivalent of a rating for the sale of shares. The target of the average price points up by about 11 percent from current levels.

Microsoft’s cloud computing business is central to progress. According to data collected by Bloomberg, Intelligent Cloud’s business accounts for 33.8% of Microsoft’s revenue for 2020, making it the largest of the three major segments for the first time and 31% in 2019. The department shows growth in revenue of 24% last year, compared to 13 percent growth in productivity and business processes and 6 percent growth in Microsoft’s more personal computing unit.

Nadella’s strategic moves have put Microsoft in a position to take advantage of business trends that emerged during the global pandemic. Locks and remote work have accelerated the transition to the company’s meeting software and encouraged customers to accelerate the upgrade of software networks and applications around the cloud. The software manufacturer Xbox game subscriptions have also lured users looking for a diversion in the months left at home.

As workers return to the office, Microsoft is trying to push new ideas for managing meetings in which some participants are personal and some remote, and offers features to increase the health and productivity of workers who the company says are burned by the plight of the last year.

“At a high level, the two main pillars of Microsoft’s story – Microsoft 365 and Azure – are well understood by the investment community, “wrote William Blair analyst Jason Ader in May. “What is perhaps less appreciated is how Microsoft has expanded its share of IT portfolios over the past 15 years, expanding into new product areas,” and took market share. The portfolio share doubled from 2006 to 2020, and “we believe it could double again in the next decade,” he wrote.

Wall Street is also positive about the company’s strategy for mergers and acquisitions. She recently announced that she was buying the pioneer Nuance Communications for speech recognition. The company also tried to acquire Discord for $ 12 billion (approximately 89,060 kroner), but the video game company turned down Microsoft’s offer.

© 2021 Bloomberg LP



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