Shares of Microsoft Corp. (NASDAQ:MSFT) surged in pre-market trading Monday after the company won a $10-billion U.S. contract to provide cloud computing services to the Pentagon.
Microsoft being awarded the contract with the U.S. military establishment was considered a surprise. Amazon.com Inc., the market leader in cloud computing services, had been expected to win the contract. Amazon already has a cloud computing contract with the Central Intelligence Agency (CIA). And media reports suggest that Amazon may challenge the contract award to Microsoft, claiming that U.S. President Donald Trump improperly interfered in the bidding process.
Meantime, some Microsoft employees are protesting involvement in the military contract, known as the Joint Enterprise Defense Infrastructure, or JEDI, that is intended to bring U.S. military technology into the modern era.
The controversy did not hold back Microsoft shares, which jumped as much as 4.1% in before-market trading on Monday from a close of $140.73 U.S. on Friday in New York. If it maintains the gain, Microsoft’s stock will trade at a record level.
Microsoft has said it will continue to pursue government and military work, despite objections from some employees. The company will also be involved in bids for a second large military contract that involves cloud-based email and collaboration software.
Microsoft’s Azure unit will lead the new Pentagon contract work and has previously worked on large cloud computing assignments involving Kroger Co. and AT&T Inc., among others. The Defense Department is investing in commercial cloud services, which host computing power and storage in remote data centers, to improve data security and speed real-time sharing of information across the military.
