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Home / Technology / Apple vs. Cloud is the race for the most valuable tech company in the world

Apple vs. Cloud is the race for the most valuable tech company in the world



After nearly a decade of dominance by Apple Inc., there is a four-way race among the top tech giants facing a trio of cloud-computing colossi.

On Friday, Microsoft Corp.

MSFT, -3.18%

MSFT, -3.18%

MSFT, -3.1

8%

ended the week as the most valuable corporation and surpassed Apple

AAPL, -4.40%

for a title the iPhone maker has held most of the past seven years. On Monday, Amazon.com Inc.

AMZN, -5.87%

briefly became the most valuable US stock corporation before falling behind. After trading on Tuesday, Apple was again at the top, about $ 5 billion ahead of Microsoft and $ 23 billion off Amazon. Behind these three, but do not forget, is Google's parent company Alphabet Inc.

OB, -5.03%

BOB, -4.83%

the company that insisted on Apple's throne less than two years ago.




Apple became the world's most valuable company in 2011, passing Exxon Mobil Corp.

XOM, -2.20%

fueled by strong cash-generating business, high profit margins, and strong iPhone sales growth. In August, Apple was even the first company with a market capitalization of 1 trillion US dollars.

But Apple lost that trillion dollar rating through a massive tech sell-off that was partly self-inflicted as investors worried about the iPhone's slowing growth rate. This has enabled three tech companies with lower financial results, but potential Monster cloud computing companies have become accustomed to Apple.

Microsoft, Amazon and Google can not hope to compete with Apple for profit. Apple posted a net profit of $ 59.5 billion in the last fiscal year, which ended in late September. This sum exceeds the combined profits of Amazon, Alphabet and Microsoft in recent years.

From 2016: Tech is Thanks to the Cloud King on Wall Street

Investors who put on Apple's competitors for the top spot, the results do not look so much like the growth rates and technology trends. The growth of cloud computing, which is dominated by the other three companies at the top of the rating list.

The two companies closest to Apple report tremendous growth in their cloud computing businesses offering cloud services to a large number of customers, large and small. Staid, the old Microsoft, which has never been an official part of the acclaimed FAANG group of technology stocks, entered a separate zone this year, driven by strong growth in the cloud.

See also: Amazon was worth almost a trillion dollars, now it's worth less than Microsoft.

Amazon's Monday came after the conclusion of its annual conference focusing on the cloud computing business of Amazon Web Services AWS re: Invent, a five-day event that highlighted new products, including a focus on machine learning and artificial intelligence in the data center. Amazon announced its own chip, which launched a range of products related to AI and a hybrid cloud service from Amazon.

"Amazon's record-breaking innovation is fully presented at re: Invent," said analyst Colin Sebastian, Robert W. Baird, from the show.

Read more: The engine driving Amazon profits has nothing to do with e-commerce.

AWS played a key role in developing what we now call corporate cloud computing when the service was launched in 2006 with the utility. At Microsoft, Satya Nadella has been completely focused on Amazon since the day Satya Nadella was named Chief Executive by Steve Ballmer in 2014.

From his first e-mail to employees until his first Wall Street call, Nadella's laser focused on building Microsoft's then-growing Azure cloud computing product, calling the cloud a "gold rush" for the tech giant. He proved to be right. When Nadella took the helm in February 2014, Microsoft traded around $ 37. On Friday, the stock closed at $ 110.89, a tripling.

More from Therese: Microsoft's earnings show that Nadella has taken the right path

Microsoft's transformation was about migrating software packages for PCs and servers to cloud-based services, while moving into Azure Investing, which went online in 2010 and now, offers more than 600 services as the largest competitor to AWS. Microsoft has also highlighted products that were unsuccessful, such as mobile phones while referring to hybrid cloud, a mix of public and private cloud for businesses that can not fully commit to moving all data out of the site , [19659002] "We believe that Nadella & Co. has the Catbird headquarters to handle more of these complex workloads (eg, AI, machine learning, etc.) as more and more companies leap in the coming years hybrid cloud architecture, "said Dan Ives, an analyst at Wedbush Securities. "While AWS is still a leader in the cloud, we believe Microsoft is beginning to close the gap."

In contrast, Google has made a slower jump to the cloud with the Google alphabet, and has recently replaced its top Cloud Exec and still managed to finish in 3rd place behind AWS and Azure. In February, company executives said the Google Cloud unit generated approximately $ 1 billion in revenue per quarter, about one-fifth the size of AWS and a small portion of its total revenue of $ 110.9 billion in 2017. Dollar, which is mainly borne by the advertising business.

Cloud computing, with its technical language and corporate focus, is not as exciting as Apple's newest and best iPhone, but has greater growth potential. Smartphones are in terms of both technology development and saturation point demand. In the last two years, the growth of the units slowed down. Apple has advised investors to focus more on its faster-growing service business, including its own much smaller cloud business, but Wall Street struggles to ignore the larger cloud numbers Apple's rivals are showing.

The Race Will Take Place Ultimately, it depends on whether more investors prefer the certainty of stable and solid cash and profits triggered by Apple, or the potential for greater growth in the cloud. Many will bet on both a known and an unknown, but the company that is considered the most valuable company will be an indicator of where the technology is heading.

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