Microsoft Corp on Wednesday briefly topped $1 trillion in value for the first time after executives predicted continued growth for its cloud computing business.
The Redmond, Washington-based company beat Wall Street estimates for quarterly profit and revenue, powered by an unexpected boost in Windows revenue and brisk growth in its cloud business which has reached tens of billions of dollars in sales.
Microsoft shares rose 4.4 percent to $130.54 in late trading after the forecast issued on a conference call with investors, pushing the company ahead of Apple Inc’s $980 billion market capitalization.
The companies and Amazon.com Inc have taken turns in recent months to rank as the world’s most valuable US-listed company. Microsoft’s stock has gained about 23 percent gain so far this year, after hitting a record high of $125.85 during regular trading hours.
Under Chief Executive Satya Nadella, the company has spent the past five years shifting from reliance on its once-dominant Windows operating system to selling cloud-based services. Azure, Microsoft’s flagship cloud product, competes with market leader Amazon Web Services (AWS) to provide computing power to businesses.
Chief Financial Officer Amy Hood told investors that Microsoft expects to see growth in the fiscal fourth quarter in the business divisions in charge of Azure and Office 365, an online version of its longtime productivity software.
For the third quarter ended March 31, Azure’s growth slowed slightly to 73 percent, down from 76 percent in the second quarter. Mike Spencer, Microsoft’s head of investor relations, said the decline was roughly in line with the company’s estimate.
Christopher Eberle, a senior equity analyst with Nomura, said that with Azure, “one should assume a slower rate of growth as we move forward, simply due to the law of large numbers.” Still, Azure will bring in $13.5 billion in sales in fiscal 2019 with an overall growth rate of 75 percent, he estimated. “I can’t name another company of that scale growing at these rates.” Microsoft tops tech rivals such as Amazon in market capitalization on some days despite having less revenue..