The Most Sought-After Tech Stock to Buy Right Now

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

MSFT – Shares of Microsoft (MSFT) have shed more than 25% year-to-date, with the rising interest rates causing a massive tech sell-off. However, the current low price level allows long-term investors to take a position in the stock to benefit from its solid growth prospects. The company has guided double-digit growth for fiscal 2023. Moreover, MSFT has been increasingly paying dividends, which should help generate a steady income stream. Read more….

Tech stocks have been hammered this year, with the Federal Reserve increasing interest rates aggressively. The tech-heavy Nasdaq is down 29.3% year-to-date. This tech sell-off has led to many quality stocks, such as Microsoft Corporation (MSFT), trading at valuations much lower than their intrinsic values.

MSFT has declined 28.3% in price year-to-date and 19.3% over the past year to close the last trading session at $240.98.

The company missed the consensus earnings and revenue estimates in the last reported quarter. Its EPS came 2.7% below the consensus estimate of $2.29, while its revenue missed consensus estimates by 0.9%. The revenue miss was primarily attributed to the worsening foreign-exchange rates.

However, despite currency fluctuations, the company guided double-digit growth in its revenue and operating income for fiscal 2023. Wedbush analyst Dan Ives said that the forecast was “shockingly strong.”

MSFT has landed large long-term Azure deals. CEO Satya Nadella said, “We are seeing larger and longer-term commitments and a record number of $100 million-plus and $1 billion-plus deals this quarter.” “Coming out of this macroeconomic crisis, the public cloud will be even a bigger winner,” he added.

MSFT has announced a quarterly dividend of $0.68, payable on December 8, 2022. The upcoming dividend will reflect a 10% increase over the previous quarter’s dividend.

Its four-year average dividend yield is 1.08%, and its forward annual dividend of $2.72 translates to a 1.13% yield. The company has increased its dividend for 17 consecutive years. Its dividend has grown at a 10.5% CAGR over the past three years.

Here’s what could influence MSFT’s performance in the upcoming months:

Robust Financials

MSFT’s revenue increased 12.3% year-over-year to $51.86 billion for the fourth quarter ended June 30, 2022. The company’s net cash from operations increased 8.4% year-over-year to $24.63 billion. Its net income increased 1.7% year-over-year to $16.74 billion. In addition, its EPS came in at $2.23, representing an increase of 2.7% year-over-year.

Favorable Analyst Estimates

MSFT’s EPS for fiscal 2023 and 2024 is expected to increase 10.6% and 17.6% year-over-year to $10.19 and $11.98. Its revenue for fiscal 2023 and 2024 is expected to increase 11.2% and 14% year-over-year to $220.43 billion and $251.49 billion. It surpassed Street EPS estimates in three of the trailing four quarters.

Higher-than-industry Profitability

In terms of trailing-12-month gross profit margin, MSFT’s 68.40% is 37% higher than the 49.94% industry average. Likewise, its 49.42% trailing-12-month EBITDA margin is 284.2% higher than the industry average of 12.86%. Furthermore, the stock’s trailing-12-month Capex/Sales came in at 12.05%, compared to the industry average of 2.40%.

POWR Ratings Show Promise

MSFT has an overall rating of B, equating to a Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. MSFT has a B grade for Quality, in sync with its higher-than-industry profitability.

It has a B grade for Stability, consistent with its 0.94 beta. Also, its favorable analyst estimates justify its B grade for Sentiment.

MSFT is ranked #8 out of 54 stocks in the B-rated Software – Business industry. Click here to access MSFT’s Growth, Value, and Momentum.

Bottom Line

Despite the uncertain macroeconomic environment and fluctuating currency exchange rates, MSFT expects its revenue and operating income to grow in double digits in fiscal 2023. The company has also raised its dividend by around 10% over the previous quarter.

Given its robust financials, favorable analyst estimates, and higher-than-industry profitability, we think it could be wise to buy the stock now.

How Does Microsoft Corporation (MSFT) Stack Up Against its Peers?

MSFT has an overall POWR Rating of B, equating to a Buy. Check out these other stocks within the Software – Business industry with an A (Strong Buy) or B (Buy) rating: VMware, Inc. (VMW), Amdocs Limited (DOX), and Citrix Systems, Inc. (CTXS).

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


MSFT shares were trading at $237.04 per share on Friday afternoon, down $3.94 (-1.63%). Year-to-date, MSFT has declined -29.06%, versus a -22.00% rise in the benchmark S&P 500 index during the same period.


About the Author: Dipanjan Banchur


Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MSFTGet RatingGet RatingGet Rating
VMWGet RatingGet RatingGet Rating
DOXGet RatingGet RatingGet Rating
CTXSGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Does Trump Change Stock Market Outlook?

The rally of the S&P 500 (SPY) after the election gives a sense that investors are happy that Trump was elected. But perhaps there is more to this story than meets the eye. That’s why Steve Reitmeister shares his updated market outlook taking into account the pros and cons of Trumps proposed new policies. This comes with a preview of his top 11 stocks to buy now.

3 Streaming Stocks Benefiting from Cord-Cutting Trends

As streaming continues to dominate the digital entertainment landscape, the global streaming market presents a lucrative investment opportunity. So, it could be ideal to invest in fundamentally solid streaming stocks Netflix (NFLX), Walt Disney (DIS), and Roku (ROKU). Read further...

3 Gold Stocks to Buy as Safe-Haven Demand Grows

Gold is a stable investment now due to its role as a safe-haven asset during economic uncertainty, rising demand, industrial use, and growth, bolstered by central bank purchases and interest rate cuts. Therefore, investors should consider investing in top gold stocks such as Newmont (NEM), Barrick Gold (GOLD), and Agnico Eagle Mines (AEM). Read more...

3 AI Stocks Transforming Industries and Driving Future Growth

With rapid digitalization, rapid adoption, and development, as well as surging demand, the AI market is on the rise. Amid this backdrop, investors could buy fundamentally solid AI stocks NVIDIA Corporation (NVDA), Microsoft (MSFT), and Meta Platforms (META) poised for substantial gains. Continue reading...

Updated Stock Market Expectations

The S&P 500 (SPY) has already reached an impressive goal of hitting 6,000. Yet you can see how much shares are struggling now up against this resistance. Steve Reitmeister shares his views on what comes next for the market and his top 10 stocks to stay on the right side of the action.

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