Microsoft Corporation’s (NASDAQ:MSFT) stock chart for the past year is standout. The only blemish is the recent correction in February. Other than that, MSFT stock has been increasing at a steady pace, with the return coming to roughly 45%.

But this is not a short-term thing. Since Satya Nadella came on board as CEO in February 2014, MSFT stock has jumped from $36 to $93 – putting the market cap at $717 billion.

OK then, what now? Is the bull case still intact for MSFT? Or should investors get cautious?

Nadella Has a Plan for Microsoft

Well, I still think there is upside. And yes, the key is Nadella, who has a powerful strategy that should help sustain the growth for the long haul.

To put things into context, here’s what he said when he took the helm four years ago:

“Microsoft is one of those rare companies to have truly revolutionized the world through technology, and I couldn’t be more honored to have been chosen to lead the company. The opportunity ahead for Microsoft is vast, but to seize it, we must focus clearly, move faster and continue to transform. A big part of my job is to accelerate our ability to bring innovative products to our customers more quickly.”

A big part of this has been to retool the existing product line. For the most part, this has meant moving aggressively to the cloud.

While this seems like a no-brainer, it’s important to keep in mind that the process is not. For decades, MSFT operated on a model of installed software, primarily on PCs. In other words, Nadella had to make a cultural change with the company, which was definitely risky.

But then again, MSFT had some inherent advantages as well, such as a powerful brand, tremendous resources, a massive customer base and thousands of talented engineers. So Nadella leveraged all of these.

MSFT’s Earnings Show Nadella’s Plan Is Working

The result of Nadella’s work is that MSFT is now the No. 2 player in the cloud industry, behind Amazon.com, Inc. (NASDAQ:AMZN). Consider the following from the latest earnings report:

• Microsoft Azure’s revenues spiked by a sizzling 98% — marking the 10th straight quarter of 90%+ growth.
• Office 365’s user base rose by 17.3% to 29.2 million and the revenues jumped by 42%.
• Microsoft Dynamics — which is a CRM platform that competes with salesforce.com, inc. (NYSE:CRM) — posted a 67% increase in growth.
• LinkedIn, which Microsoft purchased for $26.5 billion, grew by 18.2% to $1.3 billion and generated an operating profit of $144 million.

Now it’s true that MSFT stock is tied to the fortunes of the PC market, which has been declining over the years. But the company has still found ways to deal with this, as seen with the strength of Windows 10. During the latest quarter, the More Personal Computing division reported a 2% increase in revenues to $12.2 billion and operating income came to $2.5 billion.

Another key for MSFT stock is that Nadella has been investing aggressively in next-generation technologies. Just some of the areas include AI (Artificial Intelligence), AR (Augmented Reality), blockchain and quantum computing.

But MSFT is already getting traction from its efforts. For example, the company has been implementing AI systems into Office 365, such as with language translation and voice input.

Bottom Line On MSFT Stock

MSFT stock is not necessarily cheap. Note that the forward price-to-earnings multiple is at 24X. Although, it is still in-line with various other mega tech operators like Alphabet Inc (NASDAQ:GOOGL) and Facebook Inc (NASDAQ:FB).

Besides, MSFT deserves a premium because of its barriers to entry, diverse revenue streams and tremendous resources (there is $142.8 billion in overseas accounts).

Of course, this is not to imply that the next 12 months will see 45%+ returns again. This does not seem realistic. But given the core advantages of MSFT, it seems reasonable that there should still be competitive gains.

Tom Taulli is the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.