Microsoft, the storied software company cofounded by Bill Gates 46 years ago, is on track to become the second U.S. company ever worth more than $2 trillion as shares test new record highs Monday amid a raging bull market that’s lifted a slew of technology stocks to stratospheric levels.
Microsoft shares are virtually flat Monday after surging 20% this year (compared to 13% for the S&P 500) and nabbing new record highs that have lifted the company’s market capitalization to a staggering $1.97 trillion, just 1.5% away from the $2 trillion milestone.
Boosted by record sales of its enterprise cloud software during the pandemic, Microsoft appears set to cross the threshold just eight months after iPhone-maker Apple, which is now worth close to $2.3 trillion, became the first U.S. company to amass a $2 trillion market cap in August.
Redmond, Wash.-based Microsoft was the third U.S. company to surpass a $1 trillion market cap in April 2019, less than a year after Apple and Amazon did so within a few weeks of each other in August and September 2018, respectively.
Though it’s now worth about $1.9 trillion, oil giant Saudi Aramco became the world’s first company with a $2 trillion market cap in December 2019, topping the valuation on its first day of trading in Saudi Arabia.
Microsoft shares are up a staggering 50% over the past year, making the company worth more than Tesla and Facebook, the nation’s fifth and sixth most valuable companies—combined. The only firms coming close to Apple and Microsoft in value are Amazon (worth $1.7 trillion) and Alphabet (worth $1.6 trillion).
“In an environment in which Facebook, Amazon, Apple and Alphabet are up to their eyeballs in antitrust regulatory scrutiny, Microsoft—which has already lived through its regulatory trauma in the 1990s and early 2000s—now finds itself in an enviable position when its comes to expanding its cloud footprint,” Wedbush analyst Dan Ives said in Friday note. “With workforces expected to have a heavy remote focus on the other side of a vaccine being deployed, we believe this disproportionally benefits the cloud stalwart out of Redmond.”
What To Watch For
Microsoft is slated to report first-quarter earnings Tuesday after the market closes. Analysts expect the firm will post revenue of about $41 billion, 17% more than the same period a year ago and marking the company’s second-best quarterly showing ever, behind only $43 billion in revenue during last year’s fourth quarter.
Gates started Microsoft in 1975 out of his Harvard dorm room alongside childhood friend Paul Allen, who passed in 2018. The company has since grown to become the world’s second-most valuable technology company, and it’s minted four billionaires along the way—Gates and Allen alongside early employees Steve Ballmer and Charles Simonyi. Though it started as a simple software company, Microsoft released its first personal computer—running its own operating system—in 1981. Today, the company’s three main segments center around productivity (including Microsoft Office and LinkedIn), cloud services (dominated by Azure) and personal computing (namely the Windows operating system, hardware and Xbox). The three segments last quarter generated close to $15 billion in revenue each.