Microsoft moved ahead of Apple today to become the most valuable US company after a stock surge boosted its market capitalisation to US$1 trillion for the first time in regular trading following better-than-expected quarterly earnings reported after Wednesday’s closing bell.
Microsoft finished the trading day with a US$990.87 billion market capitalisation after its share price hit the US$130.51 threshold that boosted it to US$1 trillion.
The company’s stock closed at US$129.01, up 3.31 percent from yesterday’s closing price, after reaching a new 52-week high of US$131.37.
Market capitalisation – or “market cap” – is the total dollar market value of a publicly traded company's outstanding stock shares, calculated by multiplying the number of outstanding shares by the current per-share price. The metric is used by investors to measure a company’s size.
Microsoft joined Apple and Amazon.com as the only US companies to reach the US$1 trillion mark. Apple, which hit the US$1 trillion mark first last August, had a US$967.95 billion market cap yesterday. Amazon.com, which reached the US$1 trillion mark in September, had a US$936.01 billion market cap yesterday.
Microsoft declined to comment on the market cap milestone.
The company reported third-quarter net income of US$8.8 billion for the period ended 31 March, a 19 percent increase from the same quarter last year, on revenue that climbed 14 percent to US$30.6 billion.
Microsoft’s Intelligent Cloud division saw a 22 percent increase in revenue to US$9.7 billion, fueled by 73 percent growth in its Microsoft Azure hybrid hyper-scale cloud business.
But Jefferies analyst John DiFucci questions whether Microsoft’s cloud growth will ever result in material profit and whether the out-performance of Microsoft's Windows OEM revenue can continue. Both seem to be implied in Microsoft’s stock price, he said in a research note today.
“Our concern has not been about (Azure) revenue growth, it’s been about the long-term profit of this business,” DiFucci said in a research note today. “Most investors seem to think that Azure will evolve similar to AWS (Amazon Web Services), expanding margins with scale. While we also expect that to happen directionally, we have questioned whether Microsoft will ever see the profit margin of AWS at similar scale.”
Microsoft’s stock lift also was helped by its outlook for the next fiscal year for double-digit growth in revenue and operating profit – an “impressive feat” for a company of its scale, according to DiFucci.