5 Reasons to Buy Microsoft Now

NASDAQ: MSFT | Microsoft Corp. News, Ratings, and Charts

MSFT – Microsoft (MSFT) was of the biggest beneficiaries of the digital transformation, with its stock to surging to new heights. But the run isn’t over yet. David Cohne shares five reasons why investors should still buy the stock.

Shares of Microsoft (MSFT) have surged 58% over the past year. One might think that the stock only benefited from the recent digital transformation, but that’s certainly not the case. The company has been a dominant force for decades, and with a continual company-wide change in the works, the best may yet to come.

Here are five reasons why MSFT is still a stock to buy.

Cloud

Cloud is the company’s largest and fastest-growing business, with 34% growth last year. The cloud is generally considered the future of enterprise computing, and MSFT’s Azure offering is a leading player in the space. It is currently available in more than 60 regions globally, which strengthens MSFT’s competitive position.

It is current ranked #2 right now behind Amazon’s (AMZN) AWS products, but that may eventually change as Azure is growing faster than AWS. With more of MSFT’s legacy apps and its customers switching, the company is poised for strong growth due to Azure’s ability to handle future trends such as artificial intelligence and the Internet of Things (IoT).

PCs

MSFT has a dominant position in the desktop PC market as its operating systems are being used in most PCs globally. The company also holds a near-monopoly on productivity software such as its Office products, which is not expected to change anytime soon. The switch to subscription services provides the company reliable income and improving margins.

Plus, MSFT is introducing new Surface devices to make sure enterprise companies stick with Windows. Since the company has a large installed base of Office users, enterprises will be reluctant to switch to other solutions.

Gaming

The digital transformation has also benefited gaming. While MSFT had strong sales with its recent Xbox console launch, it also generates additional revenue from games and its Xbox Live online gaming service. Plus, the company has enormous upside potential in augmented and virtual reality.

MSFT recently acquired ZeniMax, which gives it access to creative studios such as Bethesda Game Studios, Bethesda Softworks, Roundhouse Studios, ZeniMax Online Studios, and all its top gaming franchises.

Collaboration

MSFT already has its Microsoft Teams offering, which allows it to compete with Slack (WORK) and Zoom (ZM). The company added new capabilities during the pandemic to enable users to work from home. This led to a surge in usage during that time.

Now, MSFT is in talks to acquire the video game chat platform Discord. Discord was founded six years ago to allow games to connect and chat. Now it’s used by all types of businesses and individuals for various types of collaboration. If the acquisition goes through, MSFT will gain an additional 140 million users.

Once integrated, Discord could be added to Azure and be used for real-time communication and file sharing, as it’s faster than Teams. It could also become the home base for all of MSFT’s cloud products.

POWR Ratings

MSFT has an overall grade of B or a Buy rating in our POWR Ratings service. It also has a Sentiment Grade of A, which means that Wall Street analysts love the stock. According to the StockNews Price Target feature, thirty-one analysts out of thirty-five have a Strong Buy or Buy rating on the stock. MSFT also has a Quality Grade of B. This means the company has a healthy balance sheet. It currently has a current ratio of 2.6, which means the company has more than enough liquidity to handle short-term liabilities.

We also provide the following grades for MSFT: Growth, Value, Momentum, and Stability. You can find those here. MSFT is ranked #16 in the Software – Application industry. You can find other top stocks in that industry by clicking here.

Want More Great Investing Ideas?

9 “MUST OWN” Growth Stocks for 2021

How to Ride the NEW Stock Bubble?

5 WINNING Stocks Chart Patterns

Why Are Stocks Struggling with 4,000?


MSFT shares rose $0.34 (+0.14%) in after-hours trading Monday. Year-to-date, MSFT has gained 6.01%, versus a 6.20% rise in the benchmark S&P 500 index during the same period.


About the Author: David Cohne


David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MSFTGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Bull Run or Bull S#*t?

The S&P 500 (SPY) has impressively broken out above 4,000. However, it seems that ONLY large caps are moving higher while smaller stocks are actually in the red. Why is this? And what does it mean for the future health of this bull market? Read on below for the answers…

:  |  News, Ratings, and Charts

3 Shipping Stocks Rated Strong Buy

Shipping stocks are buoyant as the global economy begins its rebound from the economic effects of the COVID-19 pandemic. We think ZIM Integrated Shipping Services (ZIM), Matson (MATX) and Global Ship Lease (GSL) are three companies that are well positioned to benefit from a sector resurgence and, as such, warrant a closer look now by investors. Let’s evaluate these names more closely.

:  |  News, Ratings, and Charts

Top 10 Growth Stocks

Let me prove beyond a shadow of a doubt that we are in the midst of a stock market bubble. Even better, let me explain why stocks (SPY) will rise for another 12-24 months so you can ride it higher and then parachute out at the peak. And just for good measure I will share my top 10 stocks for today’s market. Read on below for more...

:  |  News, Ratings, and Charts

Avoid These 3 Cathie Wood Stocks in April

Cathie Wood’s contrarian investment strategy may not be ideal for short-term, risk-averse investors with limited funds because most of Wood’s bets require a considerable holding period. So, we think Wood favorites Shopify (SHOP), Spotify (SPOT), and Zillow (Z), which could witness a pullback in the near term, are best avoided now.

:  |  News, Ratings, and Charts

Top 10 Growth Stocks

Let me prove beyond a shadow of a doubt that we are in the midst of a stock market bubble. Even better, let me explain why stocks (SPY) will rise for another 12-24 months so you can ride it higher and then parachute out at the peak. And just for good measure I will share my top 10 stocks for today’s market. Read on below for more...

Read More Stories

More Microsoft Corp. (MSFT) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All MSFT News