“I think they clearly can hit,” said the widely followed tech analyst on whether Microsoft will hit a $3 trillion market cap in early 2022. Ives rates Microsoft shares at Outperform with a $345 12-month price target.
Microsoft’s stock presently trades at $322 a share.
At a market value of $2.42 trillion, Microsoft is only 23% shy of reaching the $3 trillion market cap level. The company is just short of Apple as being the world’s most valuable company, as the iPhone maker’s market cap currently stands at $2.7 trillion.
“What we are seeing in the cloud, Microsoft is leading the way. I think that is what we have seen with the stock — it’s a re-rating as investors further understand just how this growth story is playing out. Our view is that this is a $3 trillion market cap company,” Ives added.
As for why Microsoft won the coveted honor here at Yahoo Finance, tech editor Dan Howley reports it reflects several factors.
First, Microsoft’s stock has put in a sterling 2021 alongside heightened volatility in big-cap tech stocks. Year-to-date, Microsoft’s stock price has skyrocketed 45%, easily outpacing the broader S&P 500’s 21% advance. Meanwhile, shares of Microsoft rivals Apple and Amazon have only gained 21% and 5.5%, respectively, year-to-date.
The company’s financials have been equally as impressive as its stock price performance, Howley notes. Microsoft has generated a whopping $176 billion in revenue in the past 12 months, up nearly 20% year-over-year.
The impressive momentum for Microsoft has attracted other bulls to the name besides Ives.
“Even after having become one of the largest companies on the planet (at $2.5 trillion in market cap), we still see a bright future ahead for Microsoft, driven by continued growth prospects in huge categories of IT spend (IaaS, cybersecurity, productivity, etc.), ability to further monetize strong positioning in multiple end markets (via E3, E5, M365, etc.), and a financial profile that continues to exhibit durable growth and margin expansion (from 30% to 42% op margin in five yrs),” said Wells Fargo analyst Michael Turrin in a Nov. 22 note to clients.
The analyst initiated coverage of Microsoft with an Outperform rating and $400 price target.