If you bought and held stock in Microsoft Corporation (NASDAQ:MSFT) at the height of the dot-com run, it’s been an unpleasant 16 years. However, after a long wait, MSFT stock finally reached a new all-time high last month. Despite the tech world changing drastically in the ensuing years, Microsoft’s PC dominance lives on, minting money for the company.

The company’s various new efforts over the years have mostly been flops. There’s a reason Microsoft stock has performed poorly; efforts such as Windows phones simply haven’t panned out. However, it seems Microsoft has finally turned the corner.

It is making real headway in several promising areas, including its cloud offering. And investors have cheered, sending Microsoft’s stock up sharply since 2013. Can the good times continue, or will buyers up at these levels be in for another long decade?

MSFT Stock Cons

Huge Stock Run-Up: Since 2013, MSFT stock has more than doubled. At first glance, that seems fine, the market has performed strongly in recent years after all. However, Microsoft is so large, that it becomes hard to achieve further such doublings. With a market cap just under $500 billion today, even one more double takes Microsoft to a trillion dollar market cap. It’s worth asking what the company has going from a growth perspective that could justify such a lofty figure.

Sure, the company has some growth initiatives under way. The cloud offering is going well. And the LinkedIn acquisition may start to bear more fruit. But after watching the stock run from under 30 in recent years to over 60 today, you have to ask how much more upside really makes sense, particularly since the company has had near non-existent revenue growth lately.

High Valuation: First things first, MSFT stock isn’t really trading at a 30 price-earnings ratio. I know that’s what financial websites report. However, that’s based on GAAP figures that include one-off losses related to restructuring. On an adjusted basis, Microsoft is trading in the mid-20s, and at 21 times forward earnings. However, even that doesn’t paint a flattering picture for the company. Microsoft traded at 12 times earnings or less over much of the past decade. Is Microsoft worth paying twice as much for now?

Sure, the PC market has stabilized, but it isn’t likely to ever be a meaningful growth driver again. And the newer initiatives such as cloud seem likely to take years to reach strong profitability. At 21 times forward earnings, MSFT stock is pricing in some serious growth prospects that may well not materialize.

Questionable Deal-Making: Microsoft has a reputation for making some head-scratching M&A moves. The less said of the aQuantive purchase and the Nokia buy, the better. Those two alone resulted in almost $14 billion of write-offs. And the recent LinkedIn deal raises questions. Microsoft paid $26 billion for LinkedIn, and offered a massive premium to where shares where trading previously. At the price Microsoft paid, it offered around 30x free cash flow for LinkedIn. On an earnings basis, LinkedIn was still losing money.

Sure, Microsoft can cut some costs there, particularly for stock-based compensation, but it’s still a massive price tag. And with Microsoft having such a huge war chest on its balance sheet, the temptation will surely be there for the company to make other huge value-destructive deals.

MSFT Stock Pros

PC Market Stabilizing: For quite a few years now, the traditional PC market appeared to be in serious decline. Sales peaked in 2011, with 364 million units sold that year globally. Since then, sales have plunged. By 2015, sales dropped 24% from that peak year, falling to just 275 million units. And 2016 showed another solid decline, with sales reaching just 260 million units. However, the worst may now have passed. 2020 projections are for 250 million units sold, only a fractional decline from current levels.

And the most recent data supports this further moderation: sales slipped just 1.5% versus the same period last year. And in several areas globally, including Canada and Japan, PC sales are actually increasing again. One possible reason, the rate of forward technological progress has slowed for both tablets and smartphones, reducing pressure on consumers to switch to smaller screens. A stable market would be great news for MSFT stock.

Partnership With Qualcomm: Microsoft has partnered with Qualcomm, Inc. (NASDAQ:QCOM) for their Internet of Things efforts. Qualcomm has entered conflict with Intel Corporation (NASDAQ:INTC) at first over the IoT market. In the longer-run, Qualcomm may use its chips to even forcefully attack Intel’s long-held dominance in the PC market. In any case, Microsoft benefits nicely from partnering up with Qualcomm.

The IoT offerings born from this venture will help spread Windows 10 outside of just the traditional PC market. And given the shellacking that QCOM stock took earlier this week following Apple Inc.’s (NASDAQ:AAPL) lawsuit against the firm, Qualcomm has reason to deepen ties with friendly partners. As an industry outcast, Qualcomm needs whatever help it can get, and if Microsoft can use that to expand Windows as a broader OS, all the better.

Solid Dividend Option: Microsoft has quietly turned into a nice yield choice for more conservative investors. The company has tripled its dividend since 2008. In total, it’s posted 16%, 18% and 16% dividend growth rates over the past three, five and ten years. While the payout ratio currently looks a little high, that’s based on abnormally soft recent earnings. Make no mistake, there is plenty of room left here for more dividend increases. The company has an astounding $137 billion in cash on its balance sheet. Even after subtracting out debt, the company has a net cash position of $62 billion, leaving plenty of firepower for increased dividends, share buybacks or acquisitions.

Verdict

MSFT stock is a decent selection if you’re purely concerned with its yield and safety. The company’s main PC business is looking healthier than it has in quite awhile. The balance sheet is tremendous. The dividend is significant at today’s level, and is bound to keep rising quickly.

However, there’s little to recommend Microsoft on valuation. The stock is expensive, even when you look closely. Microsoft has plenty of growth initiatives in the works, but actual operating results recently have only been so-so. When buying stocks at all-time highs, you want to see a business with more operating momentum.

At the time of this writing, Ian Bezek held INTC and QCOM stock. He had no position in Microsoft. You can reach him on Twitter at @irbezek.