April 25, 5:00 pm EST
Today, Microsoft was the third company to hit the trillion-dollar market cap threshold.
Apple was the first, back in August. Amazon followed in September.
Let’s talk about how Microsoft has transformed itself from a path of obsolescence to quadrupling in value in six years.
Back in April of 2013, an activist investor named Jeff Ubben took a $2 billion stake in MSFT. That same month Business Insider wrote a story titled: “Microsoft Could Be Obsolete By 2017.” The stock had gone nowhere for more than a decade.
Ubben won a board seat and he pushed for stock buybacks and a strategy reset. He pushed out the CEO, Steve Balmer. He replaced him with Satya Nadella, who was running the Miscrosoft cloud business. His job was to turn Miscrosoft into a cloud computing company. He has done it.
Microsoft is now the number two cloud computing platform globally, behind Amazon. For perspective, cloud computing is a $200 billion market growing at close to 20% a year. And Microsoft’s cloud business, Azure,grew revenue by 73% last quarter.
Bottom line: Amazon and Microsoft have a duopoly in the high growth digital storage business (i.e. cloud computing).
Amazon’s retail business gets all of the attention, but it’s cloud business has been subsidizing it’s retail business for a long time. The hyper-growth in cloud and the market dominance held by Amazon and Microsoft are why their market value has gone to a trillion-dollars, and why their charts look so similar …