Analysts: Microsoft's capitalization could reach $ 1 trillion

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More and more experts are inclined to believe that Microsoft will soon cost more than $ 1 trillion, writes CNBC. The main point of growth for the company has become a successful sales of Azure cloud product.
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Microsoft increased capitalization, reporting a successful year

Financial analysts believe that according to the results of 2018, the capitalization of Microsoft will exceed $ 1 trillion. Investors' attention is attracted by the latest reports published by the company: for the past fiscal year, the company earned more than $ 100 billion for the first time, exceeding its previous result by 14%.

The data shows that the company's results continue to improve: the company's revenue for the last quarter ended has already increased by 17% over the same period last year. This was made possible thanks to the course on the development of cloud services taken several years ago - today this trend is becoming more and more profitable.

Other contenders for trillion

In addition to Microsoft, according to forecasts for 2018, Apple, Amazon and Alphabet (the holding company that owns Google) can reach $ 1 trillion capitalization. Today, Microsoft is not the main, but the fastest growing contender. Apple is estimated at $ 940.23 billion, which is more than $ 100 billion more than Microsoft, while Amazon and Alphabet are also ahead of the company.

At the beginning of the year, when Microsoft’s target stock price was $ 106, analysts at ISI Evercore predicted that Microsoft’s capitalization would exceed $ 1 trillion by 2020. In July, after the release of the latest quarterly report, many analysts raised their target prices for Microsoft shares by $ 5 - $ 10. Today, they reach $ 130, and if you change the value by $ 0.16, Microsoft will overcome the trillion mark.

Microsoft's growth: by what means and for how long

Cloud development is key to Microsoft’s growth today. Having taken this step five years ago, the company not only correctly predicted the market trend, but also established a new monetization model - user subscriptions. In contrast to the company's classic sales of licensed software, subscriptions provide a more stable and regular income.

At the end of last fiscal year, the direction of Commercial Cloud, which includes Azure’s Microsoft cloud solution, commercial subscriptions to Office 365 applications and Dynamics 365 cloud software, grew by 3% and accounted for 25% of Microsoft’s total revenue.



Chart: CNBC

By publishing the results of the year, Microsoft announced its intention to continue double-digit growth. Not all experts are confident that the company's plans are realistic: in the long-term, opportunities for scaling will decrease, and the Commercial Cloud products will fall into tougher competition with Amazon cloud services.

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