First Trillion Dollar Company: Microsoft or Apple?

trillion dollar company

THE RACE IS ON! Big “Softy” might beat the “Big Fruity” (my new trader term for Apple) to becoming the first $1 TRILLION company. Oh yeah, Microsoft is on a huge comeback in its business model and now is a true challenger to be the first company for the $1 trillion bragging rights. So will “Softy’s” Azure cloud platform surpass “Big Fruity’s” iPhone 12 (or 17, or 22, or….whatever) in market cap? Here’s a reasonable thought; have “Softy” announce they are going into BITCOIN. Instant $1 TRILLION market cap.
(Bill Taylor/CEO)

  • Several of the largest companies are quickly approaching a $1 trillion market cap, a benchmark that’s never been reached. 
  • Microsoft wouldn’t have even been con sidered a contender until recently. Now, it stands a chance. 

If you had wondered out loud five years ago whether Microsoft  could be the first public company to reach a $1 trillion valuation, you would have been laughed out of the room. The software giant was worth less than $250 billion back then, hobbled by the lackluster performance of Windows 8, its losing battle in the smartphone market, and fears that cloud computing would render its lucrative software business obsolete.

Fast-forward to today, and you wouldn’t be so crazy to think that Microsoft could power ahead of the competition to a 12-figure valuation. CEO Satya Nadella, who took over in 2014, made cloud computing a priority. He moved quickly to grow the Azure cloud platform and shift to subscription software. The result has been an explosion in the stock price. Microsoft is now valued at around $650 billion.

Microsoft stock would need to gain another 50% or so to reach the trillion-dollar mark. That’s a big move, but it’s not unthinkable.

Not cheap but not all that expensive, either

Microsoft generated $32.3 billion of free cash flow and $22.1 billion of net income over the past 12 months. At the current stock price, the price-to-free cash flow ratio is about 20, and the price-to-earnings ratio is about 29. Given that the S&P 500 currently trades for roughly 25 times trailing-12-month earnings, these numbers don’t seem out of line…”

Full Story at BusinessInsider