Where will Microsoft be in 5 years? – The crazy fool

Microsoft (NASDAQ: MSFT) has been one of the best performers in the market in recent years, particularly in 2019. For the year, Microsoft's stock rose nearly 30%, after a profit report and very strong forecasts. For those who have not yet invested in Microsoft, you might think you missed it. Yet, although the stock has performed well and it is currently trading at unprecedented highs, it is highly likely that Microsoft's stock continues to show solid performance, for example five years later.

Microsoft has long been associated with its Windows operating system and Office software tools. While these products, especially Office 365, still represent a significant portion of Microsoft's business, the major reason Microsoft is poised to outperform in the future is in newer, faster-growing business. including Azure Cloud, infrastructure as a service of Microsoft. business.

The strength of Azure is not only positive in itself, but it also helps Microsoft to increase sales of its other products. Here's how.

Smart cloud surpasses other segments

Microsoft does not specifically disclose Azure's revenue and earnings, although it discloses Azure's growth rate, which reached 73 percent last quarter – the highest of any Microsoft product.

Azure is part of Microsoft's intelligent cloud segment, which also includes on-premises servers and software and enterprise consulting services. The smart cloud sector is currently the smallest segment of Microsoft; However, the smart cloud grew by 22% in the last quarter, faster than any other. Based on Microsoft's advice, the smart cloud could very well become the largest segment of Microsoft. as of the next quarter:

Data Source: Microsoft Q3 Press Release and Teleconference.

Microsoft is currently the largest company in the world in terms of market capitalization, but as the high growth cloud segment takes the rank of Microsoft, it is expected to support the growth rate of the mid-teens business for years to come, despite its already considerable size.

A complete offer opens markets

During the recent Microsoft conference call, Satya Nadella, CEO, explained that Azure was succeeding not only as an infrastructure service, but also opening up new markets and allowing it to sell others. products:

… if you look at our cloud stack, we have applications in infrastructure, data and AI, productivity and collaboration as well as professional applications. It's once again unique. So, I think what appears to scale as a competitive differentiation and that's what you see in our numbers, but most importantly, I think you see it in the customer momentum and in what I believe, c is his success. Digital technology is not about innovative technology companies. It's the rest of the world that is breaking new ground in technology, and Microsoft is uniquely positioned to do that.

Nadella says that Microsoft's ability to offer one-stop shopping for all of a company's digital transformation needs (infrastructure, platform and software as a service), as well as business center servers. on-site data is a significant competitive advantage. . This has allowed Microsoft to better serve areas in which it has historically had low penetration, such as retail, healthcare, manufacturing and financial services.

Azure also encourages innovation

In addition, the cloud paves the way for Microsoft to innovate entirely new products in growing industries, such as the Internet of Things and advanced computing. A year ago, Microsoft announced that it would invest $ 5 billion over four years in its IoT business. She recently acquired the Express Logic software, leader of the IoT.

Microsoft is also adapting existing platforms and traditionally delivered software for the Azure cloud, such as its Cosmos database and its cloud-based versions of Office and Dynamics, as well as new services such as: LinkedIn, GitHub, cybersecurity, etc.

What will be the size of azure in 2024?

During the teleconference, analyst Mark Murphy asked management if Azure could surpass Office 365 Commercial as Microsoft's biggest product in a few years. Financial Director Amy Hood did not reject this claim, but she also pointed out that other Microsoft software companies also have a promising future:

[i]This is certainly the case, but I do not want it to really diminish the fact that we have a lot of room in our headquarters business, particularly in the commercial applications of LinkedIn, the work we do on Power Platform. Satya mentioned security, identity, compliance, there is plenty of room for us to continue to add value and growth in this area as well.

This is the big advantage for the big leaders of the cloud infrastructure. Not only is the cloud computing infrastructure growing by leaps and bounds, but the ability of each company to overlay other services in a one-stop shop for customers migrating to the cloud is a huge advantage. I would not be surprised to see that Microsoft, like other major cloud providers, continues to outperform the market over the next five years, even if the company exceeds a market capitalization of $ 1 trillion.