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NASDAQ:MSFT Microsoft Stock Price, News & Analysis

That’s good news for Microsoft, which is heavily invested in OpenAI. Even better, Microsoft will reportedly gain a seat on OpenAI’s board of directors. This will be an observing, non-voting member of the board, but it’s a sign that Microsoft should be able to work hand-in-hand with OpenAI.

  • And on a non-GAAP basis, free cash flow was $17,090 – 24% higher than in Q3/20.
  • Debt to Equity (or D/E ratio) is total liabilities divided by total shareholder equity.
  • One of the most important aspects I demand from high-quality, wide moat companies is stability and consistency.
  • It also expects its operating margins to rise “slightly” for the full year, while analysts expect its earnings per share to grow about 15%.
  • Absorbing Activision Blizzard will give Microsoft ownership of some of the largest and most established gaming franchises, including Call of Duty and World of Warcraft.

The receding threat of the pandemic is causing consumers to spend less time at home and pushing employees back to the office. Recent pandemic-driven demand could ease in 2022, meaning the growth in the personal computer and gaming markets over the past two years could prove to be only temporary. And as we can see, the group delivered broad-based growth in the year to June 30, 2021, as each reported segment reported an increase in revenues.

What We Thought of Microsoft’s Q2 Earnings

Microsoft faces risks that vary among the products and segments. High market share in the client-server architecture over the last 30 years means significant high-margin revenue is at risk, particularly in OS, Office, and Server. However, it must continue to drive revenue growth of cloud-based products faster than revenue declines in on-premises products. The 1 week price change reflects the collective buying and selling sentiment over the short-term. A strong weekly advance (especially when accompanied by increased volume) is a sought after metric for putting potential momentum stocks onto one’s radar.

  • I believe that the company’s success is predicated on its mission to layer generative AI across its entire business.
  • But Microsoft still decreased the number of outstanding shares by about 11.2% during the last ten years.
  • Additionally, Microsoft is one of two public companies with a AAA credit rating from Standard & Poor’s.
  • The supply shortage of integrated circuits will likely drag into 2022, and possibly into 2023 too.

However, this division has room for incredible upside if AI takes off. Most people with a computer are familiar with the Microsoft Office products that come standard on nearly every device. But it also has other products like its Azure cloud computing product, Xbox, and advertising revenue from LinkedIn.

Microsoft lately has been promoting its efforts to infuse generative artificial intelligence into its software and services. Overall enterprise spending on cloud infrastructure services reached $72.4 billion in the second quarter, up 16% year over year, Canalys said. We focus our growth assumptions around Azure, Microsoft 365 E5 migration, and traction with the Power Platform for long-term value creation.

Could the current sell-off in the tech juggernaut’s share price be the buying opportunity investors have been waiting for?

Based on an average daily volume of 23,680,000 shares, the short-interest ratio is presently 2.0 days. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online stores, and retail stores. The More Personal Computing segment provides Windows original equipment manufacturer (OEM) licensing and other licensing of the Windows family of operating systems.

We believe everyone should be able to make financial decisions with confidence. Stockchase rating for Microsoft Corp is calculated according to the stock experts’ signals. A high score means experts mostly recommend to buy the stock while a low score means experts mostly recommend to sell the stock. Absorbing Activision Blizzard will give Microsoft ownership of some of the largest and most established gaming franchises, including Call of Duty and World of Warcraft.

Microsoft Cloud’s growth

This is such an impressive outperformance over 35 years that the question if Microsoft actually has a wide economic moat, seems rather a mood. The stock increased about 25% on average annually (not including dividends), which is beating Warren Buffett’s Berkshire Hathaway (BRK.A) and probably almost every other company on earth. Aside from revenue and EPS growth, we especially have to look at the company’s margins and once again we are looking for consistency. In the case of Microsoft, we see declining margins until 2016 – not a picture we like to see in the case of wide economic moat companies. Aside from margins, we especially focus on return on invested capital, which was 21.15% on average during the last decade. These are very impressive numbers indicating a wide economic moat.

The bull case for Microsoft’s stock

And even though Microsoft is already a global company, it’s still able to post strong growth in personal computers, electronics, software and cloud services. Here’s what to consider about the merits, risks and rewards of buying Microsoft stock. The investing information provided on this page is for educational purposes only.

The financial health and growth prospects of MSFT, demonstrate its potential to underperform the market. Recent price changes and earnings estimate revisions indicate this would be a good stock for momentum investors with a Momentum Score of A. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on, top-rated podcasts, and non-profit The Motley Fool Foundation. The current volatile economic environment is giving long-term-minded investors an intriguing profit opportunity.

GitHub was expensive but strategic and seems to be shaping up as a success, while the ZeniMax deal should boost the company’s first-party video game publishing efforts. We expect the Nuance acquisition to be digestible, but the recently announced Activision Blizzard acquisition is the company’s largest ever and might warrant more attention. Azure in particular is the single most critical revenue driver over the next 10 years, in our view, as hybrid environments (where Microsoft excels) drive mass cloud adoption. We believe the combination of Azure, DBMS, Dynamics 365, and Office 365 will drive above-market growth as CIOs continue to consolidate vendors.

Cash Flow is net income plus depreciation and other non-cash charges. A strong cash flow is important for covering interest payments, particularly for highly leveraged companies. Historical EPS Growth Rate looks at the average annual (trailing 12 months) EPS growth rate over the last 3-5 years of actual earnings. The PEG ratio is the P/E ratio divided by its long-term growth rate consensus. This ratio essentially compares the P/E to its growth rate, thus, for many, telling a more complete story than just the P/E ratio alone. The ever popular one-page Snapshot reports are generated for virtually every single Zacks Ranked stock.

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