If I were to give you one guess who the world’s most valuable company is (based on market cap), I bet you’d say Apple. In August the Cupertino powerhouse was the first company in history to be valued at more than one trillion dollars, and eventually climbed to $1.1T. However, since then Apple has slid back to the $815B range. In the meantime, one of the long-forgotten tech pioneers has slowly, steadily been growing its value, and is now virtually tied with Apple. Believe it or not Microsoft is about to become the world’s most valuable company, which is a title it hasn’t held since 2003.
So what’s been the key to Microsoft’s turnaround? In a word, the Cloud. When Microsoft’s current CEO Satya Nadella took the helm in 2015 he quickly realized the company needed to move past its legacy business of software development and licensing (Microsoft Office, anyone?), and pivot towards the emerging field of cloud computing. Since then Microsoft has become a leader in computing services, which has driven up the company’s profits and shareholder value. That’s a pretty amazing feat, given how little you hear about Microsoft compared to the members of FAANG.
Now Apple, Amazon and others are racing to catch up with Microsoft’s cloud business. As one investor put it, “Microsoft has already made the switch to a services business. Apple is trying to do that, and they probably will, but the question is: At what pace?” I’m sure Wall Street will give us the answer to that question over the next few years.