The storm was about 220 kilometres east-northwest of Cozumel, Mexico, with maximum sustained winds of winds of 120 kilometres per hour, forecasters said.
Alabama is under a state-wide state of emergency ahead of the hurricane, along with 92 counties in southern Georgia and 35 counties in Florida.
The storm's outer rain bands were soaking the Florida Panhandle early Wednesday as the center of the storm moved closer to its expected afternoon landfall.
"This storm will be life-threatening and extremely risky", Scott said Sunday after receiving a briefing at the State Emergency Operations Center.
Hurricaene Michael is expected to be "extremely dangerous" by meteorologists.
The unexpected brute quickly sprang from a weekend tropical depression and grew swiftly into what could be one of the Panhandle's worst hurricanes in history, with destructive wind, up to a foot of rain and a life-threatening storm surge of up to 13 feet. While the swiftly moving storm is not expected to linger over Florida for long, widespread heavy downpours will likely track inland to flood-stricken areas of the Carolinas even as rain-gorged rivers there begin to recede, National Weather Service meteorologist Ken Widelski told the conference call.
Florida Governor Rick Scott has warned residents to evacuate.
People visit the beach while waiting for Hurricane Michael in Panama City Beach, Florida.
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When reached for comment, both Microsoft and Obsidian refused to comment on rumors or speculation. A second person said, "It's a matter of when, not if".
Florida residents are scrambling to flee their homes as Hurricane Michael bears down on the state.
After hitting Florida, the storm is forecast to move north-east on Wednesday and Thursday along the Atlantic Coast and batter the Carolinas, which are still recovering from Hurricane Florence last month.
The storm was heading north at 13 mph (20 kph) and was about 90 miles (145 km) southwest of Panama City, Florida, the NHC said.
President Donald Trump, who was in Orlando delivering an address to a global association of police chiefs, said the federal government was ready and urged residents to be prepared for the worst.
Florida's Panhandle, from Pensacola to Apalachicola, and its Big Bend area are the zones of greatest concern.
"The time for evacuating along the coast has come and gone".
Michael was forecast to have the power to uproot trees, block roads and knock out power for days by the time it hits Florida on Wednesday.
Offshore oil platforms in the Gulf of Mexico have evacuated workers, halting almost a fifth of daily production.
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