Microsoft Corp. took its place in the history books as just the second US public company to reach a $2 trillion market value; buoyed by bets its dominance in cloud computing and enterprise software will expand further in a post-coronavirus world.
Its shares rose as much as 1.1% to $265.64 on Tuesday in New York, enough for the software company to join Apple Inc. as one of only two companies trading at such a lofty value.
Saudi Aramco eclipsed that threshold briefly in December 2019; but currently has a market value of about $1.9 trillion.
Since taking the reins in 2014, Chief Executive Officer Satya Nadella has reshaped the Redmond; Washington-based company into the largest seller of cloud-computing software; counting both its infrastructure and Office application cloud units.
Microsoft is also the only one of the biggest U.S. technology companies that has so far evaded the recent wave of scrutiny from increasingly active American antitrust regulators; giving it a freer hand in both acquisitions and product expansion.
Microsoft has gained 19% so far this year, outperforming Apple and Amazon.com Inc., as investors piled into the stock on expectations of long-term growth; for both earnings and revenue, and expansion in areas like machine learning and cloud computing.
The company’s third-quarter results, released in late April, topped expectations; and demonstrated strong growth across its business segments.
The tech-heavy Nasdaq 100 Index outperformed the S&P 500 Index on Tuesday; after Federal Reserve Chair Jerome Powell reiterated his view that inflation will be short lived.
Both benchmarks rose to session highs after Powell’s comments with the Nasdaq 100 up 1.1% and the S&P 500 up 0.7%.
“Microsoft checks all the boxes: it is in the markets that investors favor; it offers strong and sustainable growth; and it remains very well positioned to capitalize on the long-term secular trends we see in technology,” said Logan Purk, an analyst at Edward Jones.
A $2 trillion valuation “is warranted, given how it has pivoted toward the cloud; and it remains attractively valued even given the strong performance.”
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