Shares of Microsoft Corp. (NASDAQ:MSFT), the largest U.S. company by market capitalization, are up more than 26% year-to-date. A variety of factors are contributing to the bullishness around Microsoft stock.
Investors are bidding up Microsoft amid rising revenue, the company’s increasing footprint in the fast-growing cloud computing industry via its Azure unit, growth in its video game business and the company’s impressive cash haul, among other factors.
In other words, the company is a sprawling enterprise with scores of revenue streams. While it may not be material for Microsoft stock over the near-term the Washington-based company is exploring a new frontier: technology aimed at shoring up election security.
“In an effort to improve confidence in elections, Microsoft announced Monday that it is releasing an open-source software development kit called ElectionGuard that will use encryption techniques to let voters know when their vote is counted,” reports NPR. “It will also allow election officials and third parties to verify election results to make sure there was no interference with the results.”
Profits in Politics?
Microsoft’s ElectionGuard software development platform can be seen as a cybersecurity initiative targeted at electoral politics. Eventually, that could prove critical for Microsoft because cybersecurity is one of the fastest-growing industries within the broader technology space.
With cyber crimes on the rise, corporate and government customers are expected to spend more than $120 billion this year on cybersecurity. If global cybersecurity spending reaches $125 billion this year, that would be growth of 8.7% from the prior year, indicating cybersecurity can be an important factor for Microsoft stock going forward.
Microsoft’s ElectionGard will be made available this summer, in advance of the 2020 U.S. presidential election.
“ElectionGuard will make voting secure, more accessible, and more efficient anywhere it’s used in the United States or in democratic nations around the world,” according to Microsoft. “Among ElectionGuard’s many benefits, it will enable end-to-end verification of elections, open results to third-party organizations for secure validation, and allow individual voters to confirm their votes were correctly counted.”
Regardless of political leanings, it is not a stretch to say most investors and voters want more secure, less controversial elections. However, given the contentious political environment here in the U.S., the marquee proving ground for Microsoft and any other purveyor of election security software, there is always the chance of controversy.
This is just speculation, but with a foray into election security Microsoft stock could eventually be on the wrong end of electoral controversy. Should such a scenario materialize, it would not have a long-lasting impact on Microsoft stock, but it could be a short-term nuisance.
The Bottom Line on Microsoft Stock
For now, ElectionGard is not much more than a new product being unveiled by Microsoft. In fact, the company is not even charging for it.
“Microsoft is partnering with a number of voting machine vendors, including the largest manufacturer in the country, Election Systems & Software, but it’s unclear how extensively the industry will use the new software in its offerings,” according to NPR. “The voting machine industry has traditionally been tight-lipped about its security practices.”
As Microsoft stock is proving this year, there is a lot to like with company and the shares and much more for investors to focus on than a product that will not be making any contributions to the company’s top or bottom lines anytime soon.
At the time of this writing the author did not hold a position in any of the aforementioned securities.
