After Amazon shared financial results lower than Wall Street expectations, its share price plummeted by as much as 10% in late trading on October 25, meaning that Microsoft has overtaken it as the second largest company in the world, according to The Telegraph.
The retail colossus stated that revenues in the third quarter of the year had risen by 29% to $56.6bn, while the company recorded a leap in profits, from $256m a year ago to $2.9bn. This rise in profit, however, was not enough to satisfy predictions.
Amazon also reported predictions that sales in the last three months of the year, typically the most profitable quarter, would fall between $66.5bn–$72.5bn.
Over the last couple of months Amazon's finances have looked far more healthy, with its share prices reaching $2,000 for the first time in the end of August leading to it becoming the second company to reach the $1 trillion mark in early September.
However, company predictions suggested that company profits could be as low as $2.1bn in the final quarter of 2018, on level with last year's 4Q18.
Meanwhile, Microsoft beat Wall Street estimates for revenue and profit in its first quarter on October 24, with shares up more than 21% over the past 12 months. Analysts say it is its commitment to the cloud that is driving its success, as it holds an 18% share of the global cloud infrastructure market, the second-biggest provider behind Amazon Web Services.
"If you told an investor a few years ago that Microsoft is on the cusp of a $1 trillion market capitalization and could surpass Amazon, they'd think you were crazy," said Dan Ives, a managing director at Wedbush Securities, in an interview with The Business Times. "It speaks to how significant this cloud shift is, and what a strong hold Microsoft has on the cloud."