Microsoft Corporation (NASDAQ:MSFT) has finally shed the last vestiges of the software monopoly it was in the 20th Century.
Now, it is an integrated tech firm in its truest sense. Granted, some of its divisions cast a longer shadow than others, but the fact is, it finally has built diverse divisions that are leaders in their respective sectors … and that is being reflected on the top and bottom line.
What’s more, MSFT is executing on its vision and it is integrating its platforms across its divisions so that most divisions add value to the products in other divisions.
The Importance of Cloud to MSFT Stock
While its software business is still its main driver, its Azure cloud business is growing at nearly triple-digit rates, and is a worthy competitor to Amzon.com, Inc.’s (NASDAQ:AMZN) AWS — Amazon Web Services — dominance.
Few players in the cloud space can compete with AWS on price, but given Microsoft’s $125 billion cash hoard, it has the war chest to go after Amazon in this arena. Also, MSFT’s Azure can scale down easily to attract smaller businesses, which make up a much larger percentage of the economy.
Its most recent acquisition, social-media-for-professionals site LinkedIn, is actually growing, which is a pleasant surprise. It isn’t yet clear how MSFT is going to monetize its 500 million users and add them to the MSFT revenue stream, but so far, so good.
Its new Surface line of tablets is getting generally solid reviews, but we’ll have to wait how sales develop over the next couple of quarters. From reviews, these machines have what it takes to give Apple Inc. (NASDAQ: AAPL) a run for its money. That is quite a statement.
The phone division is still almost a year away from building a truly Microsoft phone, but it is on track and focused, which is more than we could usually say about it in recent years.
Its gaming division will release a new version of the Xbox — the Xbox One X — later this year as it gears up for the release of its augmented reality HoloLens headset. MSFT has by most accounts the best gaming box on the market, and as augmented reality games and multiplayer online games grow, MSFT is set to reap the rewards.
On the innovation front, Office 365 now has a dictation function, called of course, Dictate. It supports 20 languages and translates 60 in real time. It also replaced its Office 365 Video with Stream, which comes with Office commercial versions. Stream comes with real-time transcription, which also means you can search a video by phrases.
All these advances make it understandable why just this week, Morgan Stanley raised its price target from $72 to $80 with an “overweight” rating.
It respectable 2.2% dividend is a reminder that MSFT stock is built for the long haul and rewards dedicated shareholders. The stock is up 13% year to date but plenty of excitement awaits in the latter half of the year.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.