Is Microsoft Going To Be The Next Trillion Dollar Company?

Microsoft CEO.
Microsoft CEO Satya Nadella at a conference. (Photo: Reuters )

Just late last year, analysts are predicting that tech companies are going to be the next big thing come 2019, and will have a fantastic year overall. And it looks like technology-giant Microsoft is well on its way to make it come true.

The next trillion-dollar company?

Of course, multiple factors have brought the Bill Gates and Paul Allen-founded Company into where it is today, and where it's certainly headed, but the recent stock price increase is definitely one of the bigger ones.  

How significant is this stock price increase? Well, it's helping Microsoft turn into the next tech giant to reach the threshold of $1 trillion in market capitalization, the ones already reached by the likes of Amazon.

The Cloud business

Behind this emerging success for a company already established as Microsoft is its new cloud business, which currently has a sharp focus on enterprise, being that consumer products are slowly being rendered a bit obsolete.

As a matter of fact, ever since Satya Nadella's taking over as CEO back in 2014, and his announcement of the shift to the cloud following that, the cloud business has emerged at a really fast pace. As an example, the segment for the intelligent cloud managed to grow by up to 20 percent year over year during 2019's fiscal second quarter. Furthermore, the cloud infrastructure part represented by Azure in that segment grew by about 76 percent.

Additionally, commercial cloud revenue, which includes Microsoft Azure, Microsoft Office 365 commercial, LinkedIn's commercial portion, and Microsoft Dynamics 365 all increased as well. Collectively, they increased 48 percent, which is equivalent to $9.0 billion.

In a press release concerning Microsoft's advantage in the public cloud area against bigger players like Amazon, Nadella stated, "Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare."

The enterprise

As much as the cloud business is booming, however, the enterprise is also a huge part of Microsoft's success, reinforcing the cloud business while also banking on its own legacy to develop a strong cloud offering.

To demonstrate this, the company recently acquired LinkedIn and GitHub for $26.2 billion and $7.5 billion respectively.

Presently, the company has a price of $112 per share, corresponding to solid growth expectations and pushing the possibility that the company is next in line when it comes to breaking the trillion-dollar threshold.

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