Microsoft boosted in 2020 when it captured the cloud. Expect more benefits.

Text size

As the year drew to a close, we took a look at the 30 stocks in the

Dow Jones business average,

starting with the worst actors—

Boeing

and

Walgreens Boots Federation

– and working our way up to the highest benchmark stock—

Apple.

Almost alone among the legacy tech giants,

Microsoft

has successfully transitioned to cloud computing from its previous focus on data centers and packaged software. And the move paid off in 2020, with the stock up about 40%, heading up to a market valuation of nearly $ 1.7 trillion. That makes it the second largest stock on the U.S. list after Apple.

Former Microsoft (MSFT) took control of the market for personal-computer software, with the Windows operating system and the Office productivity suite. New Microsoft is still developing and distributing both of those, but the real story is a surefire takeover of cloud computing.

Microsoft Azure’s public cloud industry grew 48% in the September quarter. While the industry is still smaller than its competitor Amazon Web Services, it is growing faster. Microsoft ‘s legacy relationships with IT agencies provide a valuable edge as more conservative companies embrace the seemingly inevitable shift towards critical computing work in the cloud. That trend will accelerate in 2020, and few expect it to grow more slowly in 2021.

Microsoft is also seeing strong application for Office 365, the cloud-based version of its legacy mix of Word, Excel and PowerPoint. Adding to that growth are Microsoft Teams, a fast-growing unified communications software, which includes video conferencing, chat and other messaging services. Microsoft connects Teams with Office 365, creating a tight competitor for companies like

Slack

(CRM) and

Zoom video communication

(ZM).

Microsoft-related businesses have had a strong year, with the move from home to strong sales of both laptops and tablets – raising demand for both the company’s own Surface devices and for products. -mouse Windows and Office. In June, Microsoft announced the closure of its 83 retail outlets – a move to the pandemic had nothing to do with the fact that almost no one buys packaged software from retail stores anymore. .

Looking into 2021, it is not clear that the strength of the PC market will be stable – and employment segments will be tight in that part of the industry in the second half of the year. But Microsoft seems to be in a position as good as any company to benefit from a shift in IT consumption to the cloud, and away from legacy software and hardware systems. And the company should continue to see strong demand for the new generation of their Xbox game console.

Microsoft stock has valued at around 600% since current CEO Satya Nadella took over the main job in February 2014. Further gains are expected in 2021.

Write to Eric J. Savitz at [email protected]