We previously noted CNBC’s The Street’s Jim Cramer was bullish on Microsoft in 2018, mainly due to the company “thinking through” its cloud computing offerings. Just like Cramer, other analysts also recently put big faith in Microsoft, saying the company could hit a $1 trillion value by 2020, but is this really the case? A new report from Jonathan Weber over at SeekingAlpha examines the saga.
According to Weber, the original predictions of Microsoft becoming a trillion dollar company are “very aggressive.” Though the company holds a $650 billion value, “Microsoft’s valuation is unlikely to hit $1 trillion anytime soon, partially due to the impact of share repurchases,” explained Weber.
Data shows that Microsoft’s market capitalization rate would have to rise 54% through 2020 to meet the big trillion dollar value goal. Even with this so, and with the results of Microsoft buying back its own shares from the marketplace, Weber still thinks Microsoft will provide “solid returns” in the future. In fact, prior reports on Microsoft hitting a trillion dollar value cited Microsoft 365 as a growth reason, as well as Azure which has already been netting the company big profits.