News broke this morning (Thursday) that Microsoft Corp. (NASDAQ: MSFT) just joined the exclusive $1 trillion market cap club. And today's news has us reiterating our bullish Microsoft stock forecast...
Microsoft stock jumped 5.1% to $131.37 earlier this morning, sending the market cap over $1 trillion. It was not only its new intraday high, but also enough to make MSFT the third U.S. company to reach a value of $1 trillion based on its roughly 7.7 billion shares outstanding.
Microsoft joined fellow tech giants Amazon.com Inc. (NASDAQ: AMZN) and Apple Inc. (NASDAQ: AAPL) as one of the only three U.S. companies to ever reach a market cap of $1 trillion. Both Amazon and Apple achieved this last summer, prior to dropping below the value in late 2018.
Today's boost followed the release of first-quarter results late Wednesday evening.
Microsoft has recently shifted its focus to cloud-computing technology, and the result is yet another strong quarter with rebounding sales on its Windows operating system. Sales were up 14% this quarter in comparison to the same quarter in 2018. And Microsoft Office 365 commercial products jumped 30% as its customers switched to cloud-based subscriptions instead of buying software licenses.
For this quarter alone, Microsoft's sales were $30.57 billion. And the company's cloud-computing service Microsoft Azure's revenue skyrocketed 73% from the year earlier. Profits also climbed 19% - topping the target range set by analysts.
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Christopher Eberle, Nomura Instinet analyst, says Microsoft is an absolute buy right now, as the company continues to focus on and improve its customers' digital experiences.
The U.S. Federal Reserve's most recent decision to not change interest rates has also brought investors back into blue-chip stocks like Microsoft. The Nasdaq tech index also hit an all-time high on Tuesday. And the index is expected to hit another new record following Microsoft's feat and Facebook Inc.'s (NASDAQ: FB) 6.2% increase in early-morning trading.
Here's more on why our Microsoft Stock forecast remains so bullish...
Microsoft Stock Forecast: Plenty of Gains Remain
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As some investors worry about slowing global growth, companies like Microsoft, Apple, and Amazon will continue to reliably increase sales. With Microsoft's most recent rally, shares have skyrocketed 28% in 2019 alone - and 41% over the last year.
As Microsoft continues to fight for the title of world's biggest public company, Apple is gearing up for its earnings report next week with a market cap of $970 billion. Amazon has a market cap of $940 billion and will be posting its results after the market closes later this evening.
If you've been following along with Money Morning, Defense and Tech Specialist Michael A. Robinson expects bullish growth for the cloud-computing industry. Cloud-computing platforms and services are an essential part of enterprises in today's market - increasing the number of new digital businesses and operating an IT infrastructure for existing conglomerates.
Back in 2018, 80% of all enterprises were running their applications through Amazon Web Services (AWS). Beyond that, the adoption rate for Microsoft Azure jumped to 58% by year-end 2018 - growing significantly faster than Amazon's leading AWS.
Right now, 84% of all major enterprises have a multi-cloud system to help manage their operations. And large public companies are currently spending, on average, $1.2 million on cloud-computing technology.
By the end of 2019, the global public cloud services market is expected to grow 17.3%, up from 2018's $175.8 billion, to $206.2 billion. And the sub-section, Infrastructure-as-a-service (IaaS), is forecast to increase by 27.6% to $39.5 billion. By 2022, 90% of enterprises are expected to purchase public cloud IaaS.
So, since it's one of the biggest companies in the entire world, Robinson says retail investors stand to see steady, long-term profits if they invest in Microsoft.
We're not the only ones who are bullish. One analyst has a price target of $160 for MSFT. That represents a 23% gains from today's price.
And with cloud computing's rapid growth and the coming 5G wave, you can expect numerous stocks to see a massive surge in profits.
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About the Author
Daniel Smoot is a Baltimore-based editor who helps everyday investors with stock recommendations and analysis. He regularly writes about initial public offerings, technology, and more. He earned a Bachelor's degree from Towson University.