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Very Good Quarterly Results Sees Microsoft Go Past $800 Billion

Very Good Quarterly Results Sees Microsoft Go Past $800 Billion
Following another quarter of high returns driven by its software business and Azure cloud computing services, the shares of Microsoft Corp were set to open at a record high on Friday.
There was a 4 per cent increase in the shares of the company in trading before the bell to touch $108.50 that potentially enhanced the market capitalization of the company by nearly $32 billion from its current capitalization of $802 billion as recorded at the end of trading on Thursday.
Following the results, the price targets on the company’s stock was raised by at least six brokerages.
since Satya Nadella took over as chief executive in 2014, Microsoft has almost double din value driven by an increase in demand for cloud-based software. The company has also refocused on development of newer business niches.
The company reported a 89 per cent increase in the revenue for the Azure cloud service even as its signature core productivity and business processes unit that comprises of the Office 365 software suite saw reported a 13.1 per cent increase to $9.67 billion.
“Based on the results, they were able to beat on all major metrics that people were focusing on. I don’t see anything that should raise an eyebrow of concern”, said Daniel Morgan, a portfolio manager at Synovus Trust that is in possession of 418,716 Microsoft shares.
The company has been making high investments in sprucing up the fast-growing cloud business as well as in its attempt to catch up with the leader sin this market segment – which is Amazon Web Services of Inc. Alphabet Inc, IBM and Alibaba are also the rivals of the company in the segment.
“Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation,” Nadella said on a conference call on Thursday.
Shareholders can expect to get rich dividends on the shares of Microsoft that they hold as analysts are betting on the company for the long run. This allows the company to compete with its rival Apple Inc and Amazon in the run up to being the first company ever to touch the value of $1 trillion.
“Our view on MSFT is unchanged: the stock is our favorite large cap name and we expect MSFT to deliver 10-20% annual stock price appreciation for the next several years,” Canaccord Genuity analyst Richard Davis wrote in a client note.
Of the 35 analysts covering the stock, 31 have a “buy” or higher rating, three are on “hold” and only one on “strong sell”.
“Microsoft has successfully come from behind to exceed Amazon’s cloud revenue, and that gap is only increasing in Microsoft’s favor,” Mark Sami, vice president at consultancy firm SPR said.
“I predict that Microsoft’s cloud market share will continue to grow and impress investors.”

Christopher J. Mitchell

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