Microsoft stock hit an all-time high Friday, a day after the company released a quarterly earnings report that showed cloud computing is driving revenues to beat investor expectations.

By Friday afternoon, Microsoft was valued at $516.2 billion, the first time the company’s market capitalisation topped $500 billion since 2000 at the height of the first Silicon Valley boom. The stock closed at $65.78 per share, a 2.35 percent increase from its previous close.

The company posted adjusted earnings of 83 cents per share on adjusted revenues of $26.1 billion, beating forecasts of 79 cents off $25.2 billion.

Even more enticing for investors was that cloud computing services for businesses is becoming a pillar for revenue growth, along with social network LinkedIn that Microsoft acquired for $26 billion in a deal that closed last month.

Microsoft may have built a software empire with its popular Windows operating system, but analysts believe the tech giant is successfully switching gears to cloud services and other profit drivers as the global market cools for personal computers.

Revenue from its personal computing division declined 5 percent to $11.8 billion compared to last quarter.

“The pieces are falling into place as we are starting to see an important shift in the model, with improving profitability in growth segments,” analyst Ross MacMillan of RBC Capital Markets wrote in a report Friday.

Bets on artificial intelligence and a focus on Microsoft’s popular Office suite of business software are also paying off for the company.

“Our customers are seeing greater value and opportunity as we partner with them through their digital transformation,” Microsoft CEO Satya Nadella said of the earnings report. “Accelerating advancements in AI [artificial intelligence] across our platforms and services will provide further opportunity to drive growth in the Microsoft Cloud.”

Microsoft’s new market value still trails its competitors. Apple closed the week valued at $640.3 billion, while Google’s parent company, Alphabet, had a market value of $573 billion by close of markets Friday. (Barry Eitel/Anadolu Agency)

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