Microsoft Stock on track to reach $ 2 trillion valuation
After nearly a decade of stagnation, Microsoft’s stock valuation could peak at $ 2 trillion in 2021.
Despite a global pandemic and a global economy flirting with recession, the US stock market continues to climb high, rewarding the S&P 500 and Nasdaq with increases of 3% and 5% respectively for the quarter. The surge in market performance was fueled in large part by the FAAMG group (Facebook, Apple, Amazon, Microsoft, Google), which is pivoting and diversifying enough to accommodate an influx of traffic and shopping as most of the world is in quarantine. Therefore, TheStreet speculates that Microsoft could join Apple as one of two US-based companies to hold a $ 2,000 billion valuation in 2021.
Microsoft’s current market valuation of $ 1.9 trillion considers most of the $ 2 trillion speculation to be more of a fate than a possibility at this point. In April 2021 alone, Microsoft’s stock rose 7%, leaving a gap of around 5% between the company and the coveted $ 2,000 billion valuation to be phased in by its fourth fiscal quarter.
Microsoft’s assessment is based on a constant stream of diverse purchases, acquisitions, agreements and collaborations that the company continues to make, aligned with the upward trajectory of their respective business models. An acquisition of Bethesda to bolster its relatively nascent but successful subscription game streaming efforts, being charged with $ 22 billion in augmented reality hardware products for the US military or the purchase of the Marsden Group to expand its initiatives prototyping, all of them merge around a company of several billion companies.
Beyond a diversified P&L, investors seem more satisfied with Microsoft’s pivot towards subscription-based models for many services under its tentpole products. From Office to Azure to Xbox, Microsoft has at least one popular subscription service that generates stable and reliable revenue gains for the business and rewards investors with a stability quotient between 15-18%. , while competitors such as Apple and Amazon can fluctuate between 28% and beyond.
That is, there will probably be no Single acquisition that will make headlines this year which will be the tipping point to grant Microsoft the exclusive valuation of 2,000 billion shares, but more its constant capitalization of market trends before and after the pandemic. TheStreet highlights many of the same market factors we’ve reported over the past five quarters for the company as additional gains needed to snatch that $ 2,000 billion stock in 2021, which includes:
- A centuries-old shift to cloud solutions that is expected to increase cloud infrastructure revenue and possibly increase software margins.
- A change in work habits that favors the home office, a plus for business productivity offers such as cloud storage and Skype.
- The tablet-as-PC trend that favors Surface.
- The new cycle of video game consoles was recently launched with the long-awaited introduction of the Xbox Series X and S.
It may seem like a forehand from its current valuation of $ 1.9 trillion to $ 2 trillion as long as the company refrains from any spectacular unforced errors.
As mentioned, with its current trajectory, Microsoft is expected to reach $ 2 trillion by the end of the year, or sooner if it makes a few high profile acquisitions such as Discord, but market factors such as the fear of investors, expectations, trade could collapse. His efforts.
Apple and Amazon have both experienced some form of these market phenomena that have dropped Apple below $ 2 trillion on multiple occasions and cap Amazon’s valuation figuratively, which has allowed the company to dance close but did not achieve its $ 2 trillion valuation status.
Microsoft still has quite a bit of time to hit or even surpass $ 2 trillion in 2021, as long as they don’t dig in and say their latest Xbox is made from baby parts or something. of the kind.