Microsoft Regains Former Glory, Surpasses $2 Trillion Market Cap Following Apple

Apple, Microsoft, Aramco Market Capitalization Trends
Photo by Bloomberg

[Asia Economy Reporter Byunghee Park] Microsoft surpassed a market capitalization of $2 trillion last year, becoming the second U.S.-listed company to do so after Apple, Bloomberg reported on the 22nd (local time).

Microsoft, which led the personal computer (PC) era based on Windows, once seemed to fall behind as it struggled to keep up with the changes brought by the mobile era. However, surpassing a $2 trillion market cap is expected to be recorded as a milestone showing that Microsoft is regaining its former glory.

Bloomberg praised CEO Satya Nadella, who took office in 2014, for revitalizing Microsoft as a leading technology company by focusing on cloud, artificial intelligence (AI), and mobile computing.

The cloud business division recorded a 24% revenue growth last year, becoming the largest revenue-generating division among Microsoft's major business units. The revenue share of the cloud business increased from 31% in 2019 to 33.8% last year.

With evaluations that Microsoft has a business portfolio suited for the COVID-19 era, its stock price rose 19% this year, outperforming Apple and Amazon. Microsoft was the only big tech company recently not investigated by authorities regarding antitrust regulations. Thanks to this, it was able to smoothly proceed with mergers and acquisitions and production expansion, fueling its growth.

Hillary Frisch, senior analyst at Clearbridge Investments, said, "Microsoft is doing well in various businesses such as gaming, cloud, automation, and artificial intelligence (AI)," adding, "It holds attractive value even among big tech companies." She added, "Benefits are expected from the lifting of economic lockdowns and the expansion of the cloud business."

Microsoft doubled its stock price within two years after reaching $1 trillion in 2019.

According to Bloomberg's aggregation, over 90% of analysts recommend a "buy" rating for Microsoft, with no analysts issuing a sell rating. The average target price is 11% higher than the current stock price.

Logan Purk, an analyst at Edward Jones, said, "Microsoft is showing strong and sustained growth by participating in markets favored by investors," adding, "The long-term outlook is bright." He added, "Considering how the company has transformed through its cloud business, the $2 trillion market cap seems justified, and although the stock price has risen significantly, it remains attractive."