Microsoft to Beat Apple to Becoming First $1 Trillion Company

Analyst says Microsoft’s LinkedIn purchase is essential

Microsoft purchased business social network LinkedIn earlier this year for $26.2 billion as part of a takeover that many considered way too expensive, but now it turns out that it’s this acquisition the one that’s going to make the search giant the first tech company to reach trillion-dollar market value.

Analyst Michael Markowski made this forecast in an editorial piece on Equities.com, pointing out that Microsoft has big chances to beat other companies such as Google and Apple to becoming the first $1 trillion company in the world.

At this point, Apple is leading the chart with a market value of $622.6 billion, followed by Alphabet (Google’s parent company) with $549.7 billion. Microsoft is only third right now with $489.3 billion.

“Microsoft’s shares are a key core long-term hold for every portfolio. The LinkedIn acquisition will result in an increase in its PE multiple. Since Microsoft has the highest free cash flow yield of the 10 companies in my digital universe, it's the most undervalued. Microsoft clearly has the potential to outperform the market. Most importantly, the downside for its share price is limited since the current dividend yield is 2.5%,” the analyst notes.

The most undervalued right now

Microsoft is currently the most undervalued of the four most valued companies in the world, so once it starts increasing market value, Redmond should easily overtake its rivals.

Furthermore, the analyst says that Microsoft is very likely to become a leader in the emerging Social Investing Community (SIC) industry, mostly thanks to the LinkedIn acquisition.

This won’t happen overnight, though, the analyst expects. By 2025, this particular industry will become as large as digital search and social media, which means that Microsoft is playing the right card in the long term.

This can only be good news for Microsoft, especially because so many people criticized the firm for spending too much money on taking over LinkedIn in a war that also involved big names in the tech industry, such as Salesforce. Insiders claimed Microsoft paid too much for LinkedIn mainly because it competed against so many other companies, but if this analyst is right, Satya Nadella made the right decision.