Shares of Micro Focus International (NYSE:MFGP) popped on Thursday after Amazon (NASDAQ:AMZN) gave the company its full vote of confidence for helping businesses migrate to the cloud. As of 3 p.m. EST, Micro Focus stock was up 17%, but had traded as much as 25% higher earlier in the session.
In an Amazon Web Services (AWS) blog post, Amazon notes that 70% of Fortune 500 companies still run their businesses on their own mainframes. The problem is it's expensive to maintain and upgrade your own equipment, providing incentive to migrate computing power to the cloud. This, of course, sounds easy. But when you're talking about a massive enterprise, cloud migration can be complicated.
Therefore, Amazon has handpicked several businesses with the chops to help companies move their operations onto AWS. Micro Focus was listed as one of the four pre-qualified technology partners. Amazon noted how Micro Focus had already helped Kmart Australia get on AWS and believes it's up to the task to help others.
Micro Focus is a small-cap stock. Therefore, it doesn't take much to get it to pop -- much less when Amazon gives you a shoutout. While there's no indication yet for what this means for Micro Focus' revenue going forward, it surely won't hurt. Considering the company posted a 10% year-over-year decline in revenue for fiscal 2020, this might be a catalyst to help it return to growth.
However, investors should note that Amazon is looking to add more technology partners over time. Therefore, Micro Focus won't enjoy its one-of-four status forever.