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Microsoft Corporation (MSFT) Stock Is the Superior Console Play

MSFT stock did well this E3 ... and one of its component makers is an interesting gem, too


Word of Microsoft Corporation (NASDAQ:MSFT) unveiling its new gaming platform started spread around the annual Electronic Entertainment Expo (E3) on Sunday night. As far as binary competitive events go, this one was a snoozer. MSFT barely moved, while console rival Sony Corp (ADR) (NYSE:SNE) moved in almost perfect step. But that’s actually an opportunity for forward-looking investors who want to back the right horse. In this case, it’s MSFT stock.

Microsoft Corporation (MSFT) Stock Is the Superior Console Play
Source: Microsoft

Even though the Xbox One X may not be setting Wall Street on fire right now, it has critical mass building behind it in terms of gamer buzz. We’ve only known the official product name for the last three days and the Internet is already lit up with 2.4 million hits.

That’s a nice, steep word-of-mouth ramp of anticipation that shows hardcore console players can’t wait to find out what the once-secret “Project Scorpio” is really all about. After all, Sony’s highest-end game box, the PlayStation 4 Pro, has “only” accumulated 10X as many Internet hits across 100X the timeframe, including the always-critical holiday gift season.

And since the PS 4 Pro has been on the market since November, a lot of that chatter is really just the background noise of online catalog listings, YouTube test play videos and other “invisible” mentions of the brand.

Purely on the buzz, I believe MSFT stock has the upper hand here.

While the Xbox One X may be too much machine for a lot of casual gamers, it definitely pushes the technological envelope with truly massive computing power and graphic resolution. With roughly 4,000 pixels across the long axis, this is the box that can take advantage of the best TVs currently on the market.

Sony isn’t quite there yet, and Nintendo, which runs the “casual” console platform, makes do with emulators. Now that MSFT has the technological high ground, that end of the market is the company’s to lose — it might still lose ultra-hardcore gamers to specialized personal computers, but those machines happen to run on Windows anyway.

It might take Sony another couple of years and a lot of development costs to match.

For now, while the fans may complain about the relative absence of must-have games produced for the new box, there’s a long time for announcements between now and the November commercial rollout. We’ve seen the baseline response: not a bust, but not a bonanza either. Now it’s up to management to create some true sizzle.

That, steady growth and a decent 2.3% dividend on MSFT stock continue to make Microsoft a solid blue-chip buy.

In the meantime, if you’re looking for a little action to play I recommend taking a look at Advanced Micro Devices, Inc. (NASDAQ:AMD), which makes the high-end graphics processors that drive this box.

This stock has gotten really interesting as a trading opportunity.

Hilary Kramer is the editor of GameChangers, Breakout Stocks, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.

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