Can Microsoft’s Cloud Technology Boost Halliburton’s Margins?

Can Microsoft’s Cloud Technology Boost Halliburton’s Margins?

Share to Linkedin 26 March 2021, Bavaria, Munich: The Microsoft logo hangs on the facade of an office building in ... [+] Parkstadt Schwabing, in the north of the Bavarian capital. Photo: Peter Kneffel/dpa (Photo by Peter Kneffel/picture alliance via Getty Images) Since 2017, Microsoft's stock (NASDAQ: MSFT) has more than doubled in value supported by strong revenue growth and expanding margins while Halliburton's stock (NYSE: HAL) has consistently trended downward due to weak benchmark prices and shrinking margins. In July 2020, Halliburton partnered with Microsoft and Accenture to migrate Halliburton's existing data centers to cloud and enhance digital offerings. Due to low oil demand and expectations of relatively stable benchmark prices in the coming years, oil & gas producers are focusing on operational and capital efficiency. Thus, Halliburton is improving its product offerings according to client requirements. Moreover, the company slashed its capital expenditure by 50% (y-o-y) in 2020 and plans to increase asset productivity by augmenting its solutions business in 2021. While Microsoft's cloud business has been the key driver of double-digit investor returns in the past few years, will the digital shift improve Halliburton's profitability in the long run? Trefis compares the recent historical stock price trends