Microsoft pips Google to become world’s third-most valuable company
01 Jun 2018
Microsoft Corporation on Wednesday (30 May) emerged the third-most valuable corporation in the world, with a market cap of $753 billion, surpassing Google parent Alphabet’s market cap of $742 billion.
Microsoft’s valuation now stands third behind Apple and Amazon which lead with market caps of $924 billion and $783 billion, respectively.
All four companies — the Big Four of consumer tech — are in the race to reach the $1-trillion mark.
A strong focus on its public cloud business has boosted investor confidence and fuelled Microsoft's growth in the last 12 months. In the last 12 months, Microsoft stock has grown nearly 40 per cent — more than five times that of Alphabet’s.
Earlier this year, investment bank Morgan Stanley estimated that Microsoft could reach $1 trillion in valuation by the end of 2018. According to Morgan Stanley estimate, Microsoft's cloud business could double in the next three years, propelling it to a $1 trillion market cap company.
Impressive growth in its cloud computing division has garnered investor confidence, triggering Microsoft’s bull run.
“With public cloud adoption expected to grow from 21 per cent of workloads today to 44 per cent in the next three years, Microsoft looks poised to maintain a dominant position in a public cloud market we expect to more than double in size to more than $250 billion,” Keith Weiss, equity analyst at Morgan Stanley, stated.
In March, Microsoft restructured its Windows and Devices Group and moved its engineering resources into other business units, including one dedicated to cloud and artificial intelligence. The company is increasingly building an identity around cloud, and moving away from its traditional Windows-centric image.
Microsoft in focusing on Azure (its public cloud platform) and Microsoft 365 (a new suite that bundles Windows as well as Office 365 productivity software).
CEO Satya Nadella’s vision has taken Azure to the second spot in the public cloud market. Azure has a 13-per cent market share, trailing only Amazon Web Services (34 per cent share), according to Synergy Research Group.
Microsoft competes with the likes of Google, IBM, Oracle, Salesforce, Cisco, and Adobe in the public cloud market.
Other promising business divisions include gaming (Microsoft owns both hardware and software for Xbox products) and LinkedIn (professional networking site which Microsoft acquired for $26.2 billion in 2016). In 2017, ‘Jobs’ visitors on LinkedIn increased 65 per cent, while messages sent on the platform grew 40 per cent.