Microsoft could be the next trillion dollar company, says Morgan Stanley
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Despite Gartner and IDC continually pounding the drum of defeat for the PC market each month, and Windows 10 consumer adoption plateauing, Microsoft is enjoying record gains in the stock market as it inches closer to becoming a trillion dollar company. After shares rose more than 5.5% following a favorable note to investors from investment firm Morgan Stanley, Microsoft investors can now see a clearer path to the coveted trillion dollar market cap.
Earlier this week, Morgan Stanley analyst Keith Weiss penned a note to investors where he raised his twelve-month projections for Microsoft by almost 50%, which boosted the company’s trading share up from $87 to $150 within a week.
Thanks to an interview with Trading Nation, we get to hear Weiss’ assessment straight from his mouth. Weiss’ favorable nod to Microsoft comes from his bullish belief (assuming a lot of financial metrics were involved as well) that the company’s Azure service’s democratization of cloud computing will bode well against its competitors in the future.
With Public Cloud adoption expected to grow from 21% of workloads today to 44% in the next three years, Microsoft looks poised to maintain a dominant position in a public cloud market we expect to more than double in size to (more than) $250 billion dollars.
To further clarify his position, Weiss also makes note that Microsoft’s Office install base is where the company’s leverage comes from, in that, there already are established channels of inertia in the enterprise space.
Strong positioning for ramping public cloud adoption, large distribution channels and installed customer base, and improving margins support a path to $50 billion in EBIT and a $1 trillion market cap for MSFT.
The race to a one trillion dollar market cap has been hotly contested as of late with Amazon soaring past more established tech companies, and Apple skipping on the backs of iPhone sales towards the mark. However, Microsoft’s spot at number four could be changing soon, as Weiss’ prediction would put the company on a course to achieving the trillion dollar target in just under a year.
