14 DAY TRIAL // Microsoft’s cloud business has experienced a massive growth in the last quarter, becoming under the leadership of CEO Satya Nadella the main engine powering the company’s ascension towards the $1 trillion market cap.
And now analysts forecast that this growth would continue in the short term, with Azure replacing Windows as the company’s number one cash cow.
Analyst James Cordwell said in a note to investors that Azure is likely to surpass $100 billion revenue in the next 10 years. Cordwell has set a price tag of $125 for Microsoft.
“Azure has replaced Windows as the platform underpinning Microsoft's enterprise offering, and we forecast it exceeding $100 billion revenue over the next decade,” the analyst was quoted as saying by CNBC.
“With Office 365, Microsoft has already established a strong position in the software as a service market and there remains robust growth potential as the greater accessibility of the cloud delivery model continues to drive expansion in the user base and customers steadily upgrade from basic packages.”
The race to $1 trillion cap
But despite the massive growth, Azure won’t take over the leading spot in the cloud business, the analyst says. At this point, Amazon Web Services is currently positioned to continue its growth as well, and according to the forecast, it should retain its leadership ahead of Microsoft Azure.
“While Azure is not going to establish the monopoly position that Windows enjoyed, we believe it is addressing a much larger market that is still in the early stages of development. We model Amazon Web Services and Azure reaching $185 billion and $115 billion revenue in 10 years’ time, implying roughly 70 percent combined share of the market at that time,” the analyst noted.
Microsoft, Amazon, and Apple are three of the companies that are currently positioned to surpass the $1 trillion market cap in the next years, with analysts estimating that the iPhone maker could be the first one to do it. If today’s prediction proves accurate, Amazon can become the second to touch this important milestone.