Table of Contents
- A Compelling Business Strategy has driven Microsoft’s Incredible Run-up
- Cloud Is The Biggest Contributor To MSFT Share Price Growth
- Office 365 Should Be The Company’s Core Product Going Forward
- The Big Question: Will Microsoft’s Cloud Strategy Pay Off?
- Is Microsoft the first trillion dollar company?
- Is Amazon richer than Microsoft?
- Final Thoughts
Microsoft stock has been tearing it up lately, with shares soaring more than 45% in the last 12 months. It’s hard to overstate how impressive this performance has been. After all, we’re talking about a company that is still essentially in the same business as it was 20 years ago.
But MSFT has also undergone an amazing transformation over the past few decades. Once a company that solely built software products and services for other businesses, MSFT today is also a massive cloud computing and services provider with more than 500 million users of its Office 365 service alone.
And while some may think that the world would be a better place if Bill Gates had instead started a non-profit charity called “The Gates Foundation” rather than founding MSFT back in 1980, there’s no denying that his decision to do so has resulted in some amazing long-term benefits for society as a whole.
A Compelling Business Strategy has driven Microsoft’s Incredible Run-up
As we mentioned at the beginning of this article, one of the remarkable things about Microsoft’s growth is that the company has remained faithful to its core business strategy since its founding.
While many businesses have either dramatically changed or failed over the last few decades, Microsoft has thrived. This is large because the company has stuck to building products and services that help other companies thrive rather than being overly concerned with growing its customer base.
Investors, in particular, have appreciated this approach, as the company’s revenue-per-customer has increased over time. As customers have increasingly purchased new versions of Microsoft products or added new services to their accounts, the company’s bottom line has benefited significantly.
Cloud Is The Biggest Contributor To MSFT Share Price Growth
As we mentioned at the beginning of this article, Microsoft’s core business is still selling software and services to businesses, with the bulk of revenue coming from customers using Office 365. But Microsoft’s Azure cloud computing platform has been taking a bigger and bigger piece of the company’s overall revenue pie.
Previously, Microsoft had struggled to break into the cloud computing market, as Amazon’s AWS had quickly become the leading provider of cloud computing services. But the company has made major strides in the past few years and is now believed to be the second-largest provider of cloud computing services globally.
Investors have taken note of this trend, as Microsoft’s share price has soared in tandem with the company’s cloud revenue growth. With the company likely to continue building out its cloud services, there is every reason to believe that this growth will continue.
Office 365 Should Be The Company’s Core Product Going Forward
As we mentioned at the beginning of this article, Microsoft’s Office 365 product has been a massive success since it was first released a few years ago. This product has been designed to be a one-stop shop for businesses that need software, communications tools, and services.
In recent years, the company has also been pushing a device-agnostic approach for business users, with its software now able to run on PCs, Macs, mobile devices, and even the Surface hardware line.
This has allowed Office 365 to become a major platform for business communications, with the product helping to facilitate everything from project management to video calls. With this product now at the core of Microsoft’s business, the company should be able to maximize profit from this product for years to come.
The Big Question: Will Microsoft’s Cloud Strategy Pay Off?
Of course, with Microsoft’s business now heavily focused on the cloud, some analysts have warned that a possible economic downturn could hurt the company. In particular, the company has been heavily reliant on business spending, with its Azure services particularly appealing to companies looking toward a future heavily reliant on cloud computing.
At the same time, we’re also seeing a massive shift toward cloud-based services among large and small enterprises. And while there is some risk of a downturn affecting Microsoft, it is important to note that the company has been very cautious in managing its cash flow.
This is highlighted by the fact that the company currently has more than $100 billion in cash on its balance sheet. Even if a downturn results in slower spending, Microsoft has been shifting toward subscription-based services and away from one-time sales. This makes the company less dependent on a one-off cash infusion, as customers can “roll in” their payments over time.
Is Microsoft the first trillion dollar company?
Many pundits and analysts have made the case that Microsoft will inevitably become the first trillion-dollar company. There are two reasons why this is a distinct possibility for the company: first, its share price has been rising steadily over the past few years and is now close to an all-time high; and second, it seems likely that the company will eventually acquire a major asset or acquire another company.
For example, there’s been a lot of speculation about a possible acquisition of Netflix, with Microsoft being the favored suitor for many analysts. As for why Netflix would be a good acquisition for Microsoft, one of the key reasons would be that the company would get a major streaming video platform.
There is also talk of Microsoft buying out Tesla, with the two companies being natural partners. This would help Microsoft diversify its product lines while giving it a major foothold in the autonomous vehicle market expected to boom in the coming years. Of course, there’s no guarantee that any of these deals will happen. But Microsoft will likely make a big acquisition as it continues to grow its business in the coming years.
Is Amazon richer than Microsoft?
There have been a lot of talks recently about whether Amazon will soon surpass Microsoft as the world’s most valuable company. While it’s true that Amazon’s stock has been rising quite quickly over the past few years, there’s no evidence that this has been an intentional effort on Amazon’s part.
Amazon has invested heavily in new product lines, from groceries to video content. In addition, the company has been experimenting with new technologies, such as the company’s new “ice giant” data center.
As a result, Amazon’s profit margin has been falling over the past few years, making it unlikely that the company will be able to overtake Microsoft anytime soon. That being said, Amazon is certainly a company to watch in the future. With its stock price rising, the company may soon challenge Microsoft as the world’s leading tech company.
Microsoft’s success has been driven by excellent products and a willingness to adapt to a changing market. The company was one of the first tech companies to embrace the idea of “cloud computing,” It has continued to evolve as new technologies emerge.
In particular, the company has made a big push over the past few years to become an “AI first” company, focusing on technologies such as machine learning and augmented reality. With new products like the Surface Hub 2 and HoloLens 2, it’s clear that Microsoft isn’t resting on its laurels and is continuing to push forward.