Microsoft has now surpassed Google in terms of value, and this is the first time this has happened in three years. According to a report on CNBC, the total market value of Microsoft at the moment stands at $753 billion while Alphabet, Google’s parent company, has a total market value of $739 billion. The new valuation also makes Microsoft the third most valuable company in the world. The top two spots are currently held by online retailer Amazon and smartphone maker Apple.
But many analysts believe that the triumph for Microsoft will only be temporary. Google surpassed Microsoft in value for the first time in 2012. Over the last six years, the two companies have interchanged positions over and over again so it won’t be a surprise if they do the same in the years ahead. Nonetheless, there’s no doubt that Microsoft has really made huge improvements in its stock price over the last five years.
Since the current CEO Satya Nadella took over from retired former CEO Steve Ballmer five years ago, the value of Microsoft stocks has more than doubled. The business strategy adapted by Nadella has been credited for this success. Microsoft has diversified into cross-platform technologies offering cloud and AI services to its clients. The company has also been keen to secure the future of quantum computing as well as mixed reality technology.
In addition to this, Nadella also got rid of unsustainable products. For instance, the CEO quashed Microsoft’s failed Windows Phone. The company has also steered away from Windows. Although Windows still remains a very important product for the company, in the last few years under Nadella Microsoft has been diversifying and moving away from its reliance on the OS.
Despite these steps, the company is still far from Apple, the most valuable company on the planet. Apple’s current value stands at $923 billion. But Amazon, which is ranked as the second most valuable company in the world, is not far behind. The retail giant is valued at $782 billion and Microsoft may surpass it in the coming years. However, this will depend on a lot of factors. Amazon has been upping its game in the recent years venturing into new business areas beyond its main online retail business.
But Microsoft is relatively unique compared to the other big companies in the top 4 list. The company has a diverse range of businesses that generate revenue. On the other hand, Google generates 90% of its entire revenue from advertising. 60% of Apple’s annual revenues also come from the sale of smartphones. Revenue sources for Microsoft cut across various sectors. In its recent quarterly report, Windows, Surface, and gaming accounted for 35% of sales while the cloud and Microsoft Office accounted for roughly more than 30% each. The cloud business, in particular, is expected to grow very fast in the coming years. This could easily push Microsoft shares beyond the $100 per share price in the near future.