Microsoft stock's record run being driven by Office 365 pricing and cloud

Microsoft's market value crossed $2T in June joining only Apple

Microsoft shares are experiencing some serious momentum, rising for the third consecutive session Monday to a fresh all-time high. 

Ticker Security Last Change Change %
MSFT MICROSOFT CORP. 308.17 +0.88 +0.29%

The stock is now sitting at the highest level since March of 1986, as tracked by Dow Jones Market Data Group, after gaining 37% through Monday, besting both the S&P 500 and Nasdaq Composite, which are up 16% and 19% respectively over the same time period. 

Shares are headed for the best month since June, when it crossed $2 trillion in market value, joining only Apple in that milestone. 

Ticker Security Last Change Change %
AAPL APPLE, INC. 148.31 +1.76 +1.20%

MICROSOFT JOINS APPLE IN $2T CLUB

Although the software giant recently posted a 49% jump in quarterly profits and a 21% increase in sales, analysts are pointing to more driving factors for the company. 

Dan Ives, Wedbush Securities, recently wrote about "further Cloud and Office 365 Tailwinds in 2022" in a research note to clients. 

Specifically, his independent research shows the company's Azure cloud unit is strengthening. "We are seeing deal sizes continue to increase markedly as enterprise-wide digital transformation shifts are accelerating with CIOs all focused on readying their respective enterprises for a cloud-driven architecture…" he wrote. 

MICROSOFT BLOWS PAST PROFIT AND SALES ESTIMATES

Azure, as noted by the company, posted a 50% revenue jump last quarter. 

Additionally, the company is raising the cost of Office 365 in 2022, a move Ives described as a "smart strategic poker move that could be another $5 billion+ incremental tailwind for Redmond in 2022," the note added. 

The company's price increase, the first major hike in a decade, is being driven by the product's evolution. 

"Since introducing Microsoft 365 we have added 24 apps1 to the suites—Microsoft Teams, Power Apps, Power BI, Power Automate, Stream, Planner, Visio, OneDrive, Yammer, and Whiteboard—and have released over 1,400 new features and capabilities in three key areas," the company explained. 

"On March 1, 2022, we will update our list pricing for the following commercial products: Microsoft 365 Business Basic (from $5 to $6 per user), Microsoft 365 Business Premium (from $20 to $22), Office 365 E1 (from $8 to $10), Office 365 E3 (from $20 to $23), Office 365 E5 (from $35 to $38), and Microsoft 365 E3 (from $32 to $36)," the update disclosed.