Microsoft joins Apple to become second US firm to enter $2 trillion market value

Tech giant Microsoft became the second American company to enter the $2 trillion club after its shares rose as much as 1.2% in New York on Tuesday afternoon. According to a Bloomberg report, Microsoft briefly joined Apple Inc. as one of the only two US companies trading in the $2 trillion market with its share valued at $265.51.  

Overall, amidst the COVID-19 pandemic, Microsoft was able to establish its dominance in the software markets and gained as much as 19% outperforming Apple and Amazon.com Inc. Expectations on its long-term growth ride strong for both its earnings and revenue and further expansion in areas like machine learning and cloud computing is anticipated for the Satya Nadella-led company. 

Microsoft posts huge profits during pandemic

In 2020, when the unprecedented pandemic had toppled the economies and caused a financial crisis for multinationals, Microsoft had posted a 'minimal impact' of COVID-19 on the company's revenue. For the quarter ending March 31, 2020, its revenue stood at $35.0 billion, an increase of 15% while its operating income was $13.0 billion, increased by 25%.

According to data compiled by Bloomberg, the Intelligent Cloud business accounted for 33.8% of Microsoft’s 2020 revenue, making it the largest of the three major segments for the first time, and up from 31% in 2019. The division showed revenue growth of 24% last year, compared with the 13% growth in Productivity and Business Processes, and the 6% growth of Microsoft’s More Personal Computing unit.

The growth is being attributed to the clever decisions of Satya Nadella who harnessed the pandemic to his benefit. During the global health crisis when people are compelled to stay at home and resort to the concept of 'work from home', Microsoft saw a surge in the use of cloud-based platforms as remote work accelerated a shift to the company’s meeting software around the globe. Additionally, revenue from the gaming business and its Xbox gaming subscriptions also lured users who were trapped at home for months amid the lockdown restrictions.

Entering the $2 trillion club, Microsoft has now consolidated its dominance and has reaffirmed expectations of strong growth across its business segments. The last company to hold that value was Saudi Aramco which entered the exclusive $2 trillion club very briefly in December 2019. Currently, it stands at $1.9 trillion.