Thanks to an increase in its share price, the Microsoft Corporation (NASDAQ: MSFT) broke the $2 trillion market capitalisation barrier last night.
While it is not the first company to do so, Microsoft joins an elite and select club. Population? Two.
That's right, only Microsoft and Apple Inc (NASDAQ: AAPL) can currently lay claim to 'multi-trillion' status.
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What's pushing the Microsoft share price higher?
It may come as a surprise, but Microsoft has outperformed a few of its 'FAANG' friends so far this year including Amazon.com Inc (NASDAQ: AMZN), Netflix Inc (NASDAQ: NFLX), and Apple.
Most people will be familiar with Microsoft's software and consumer electronics, whether that be the operating system on your computer, gaming console, or laptop. However, Business Insider suggests analysts see the rise in value fuelled by the company's lead in cloud computing.
While less known to consumers, the company's cloud-computing platform Azure is prominent among other companies. Approximately 95% of Fortune 500 companies rely on Azure, according to Microsoft's 2020 full year report.
Wedbush Securities managing director and analyst Dan Ives revised his 12-month price target for the tech giant yesterday. The Microsoft share price target was increased from $310 to $325 with an 'outperform' rating.
Ives justified the increased price target, stating:
With workforces expected to have a heavy remote focus, we believe the cloud shift is just beginning to take its next stage of growth globally. We believe this disproportionally benefits the cloud stalwart out of Redmond, as (Microsoft CEO Satya) Nadella & Co is so well positioned in its core enterprise backyard to further deploy its Azure/Office 365 as the cloud backbone and artery.
Cloud everything
Analysts are bullish on Microsoft's cloud potential following an unprecedented year that has potentially brought forward the adoption curve.
Microsoft's own commercial cloud platform experienced a 36% year-over-year increase to $50 billion in revenue in 2020 — yes, you read that correctly, $50 billion, with a 'B'.
Many companies are shifting to cloud-based processing to take advantage of the scalability of processing power and storage. By Microsoft's own estimates more than 50 billion devices will come online by 2030 seeking a cloud-based platform to operate from.
The Microsoft share price has gained 34% over the past 12 months. In after-hours trade the companies shares have settled at US$265.28 a piece.
