Microsoft will soon be valued at $1 trillion thanks in part to the software giant’s dominance in cloud computing, according to analysts at Morgan Stanley.
The investment bank raised its 12-month price target for Microsoft’s shares to $130 from $110, predicting a 49% gain. The report on Monday triggered a rally in the stock, with Microsoft jumping more than 6.3%, bringing its market value to about $714 billion.
Other tech heavyweights still hold a lead over Microsoft. Apple is worth $861 billion, while Amazon’s market cap is $739 billion. Alphabet, Google’s parent company, fell to $709 billion during Monday’s trading session.
“Strong positioning for ramping public cloud adoption, large distribution channels and installed customer base, and improving margins support a path to $50 billion in [earnings before interest and taxes] and a $1 trillion market cap for [Microsoft],” Morgan Stanley analysts wrote in a note to clients.
The analysts added that Microsoft has a strong position in the public cloud market, which they expect will more than double in size to at least $250 billion.
Morgan Stanley also cited Microsoft’s productivity applications and platform-as-a-service capabilities, such as machine learning and analytics.