It took Microsoft 44 years to hit a $1 trillion market capitalization. According to some analysts, the next trillion may come much, much sooner.
Microsoft is currently valued at $1.42 trillion dollars, after cresting the $1 trillion barrier in April 2019.
According to Wells Fargo Securities analyst, Philip Winslow, Microsoft will reach a market cap of about $2 trillion in only two years, raising its share price from $187.76 today to $283.
The boost is based largely on Microsoft’s growing cloud business, taking market share from Amazon, but with good support from their other divisions also:
Motley Fool notes:
The pandemic has shown that not having a cloud strategy is a recipe for failure for many businesses. As more and more companies begin the digital transformation, Microsoft will continue to close the gap with AWS and widen its lead against Google Cloud.
If Microsoft continues its overall revenue growth of about 14% over the next few years while also generating EPS and free cash flow growth of about 17%, it will have a clear path to a $2 trillion valuation. Generating 20% growth from its intelligent cloud segment, increasing its productivity and business process segment by 10%, and boosting just 3% from Windows will push it over the finish line. Those segments increased in the first quarter by 27%, 15%, and 3%, respectively, so these estimates are by no means outlandish.
Microsoft is competing for the crown with Apple and Amazon, with Apple expected to continue strong growth in its accessories and services market, while Amazon is expected to benefit from the strong move towards online retail due to the COVID-19 crisis and its own burgeoning cloud business.
Read the Fool’s full report here.