Not long ago, Apple Inc. (NASDAQ:AAPL) perfected the art of the big reveal. New Apple product announcements would be shrouded in mystery for weeks, and then the late Steve Jobs would get up on a stage and wow consumers and investors alike with the first-ever iPhone, the first-ever iPad or the first-ever iPod. AAPL stock would get an automatic 10% to 15% bump in the days that followed. Could Microsoft Corporation (NASDAQ:MSFT) have a similarly secretive catalyst in its so-called Windows Cloud product?
Windows Cloud is a mysterious operating system that was revealed via leaks, prompting a “nothing to share” response from Microsoft last week.
What Is the Windows Cloud?
A couple websites posted screen shots of Microsoft’s yet-to-be-announced operating system, which would only run Windows Store apps designed to run on both desktop computers and mobile devices. The thought is that the Windows Cloud would supplement, not replace, the company’s Windows 10 platform, which is only 18 months old.
The Windows Cloud is already being viewed as Microsoft’s answer to Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) Chrome OS. And by utilizing only its own apps, the platform could have a security advantage over Chrome, which uses non-native apps. That could position Windows 10 as a more appealing option to public institutions like schools, where protecting students’ computers from outside apps or games can be difficult.
Not much else is known about the Windows Cloud platform. And that’s probably how Microsoft likes it. Although Wall Street didn’t immediately embrace the top-secret new product by snatching up MSFT stock in droves, the real test will be when the company actually does its big Windows Cloud reveal. Will the platform impress enough to have an AAPL-like effect on Microsoft stock?
First, let’s look at how MSFT stock has been behaving lately.
There was big spike in MSFT stock last month has since been followed by a sharp retreat; however, the stock is still hovering above its 25- and 50-day moving averages, as well as two-month support in the $62-range.
What you don’t see is any kind of Microsoft stock price movement in the days since the Windows Cloud leak occurred. That means investors aren’t quite sure exactly what the Windows Cloud is and how it could affect MSFT’s business, which is why there has been no sudden rush to buy MSFT.
If more details leak out, that could potentially move the needle. For now, though, the Windows Cloud remains a relative mystery that likely has Wall Street more confused than excited.
MSFT Stock Is Strong Even Without the ‘Cloud’
In the meantime, Microsoft looks good on its own merits. MSFT stock is up nearly 30% in the last year, nearly 50% in the last two years, still trades at less than 20 times forward earnings estimates, and is expected to grow earnings-per-share by more than 6% this year and more than 9% next year. Sprinkle in a potential game changer in the Windows Cloud, and there’s no reason to suspect Microsoft stock is going to suddenly backtrack.
On the contrary, the recent mini-dip is a prime buying opportunity, so long as it holds above those short-term moving averages. I’d buy MSFT stock right here, with the hope that a future Windows Cloud unveiling could spark a quick run-up the way Apple’s secret product launches used to.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.