It may surprise many people to know that Microsoft (NASDAQ:MSFT) is now more valuable than the darling FANG stocks. With a market capitalization of $961 billion, this exceeds ecommerce giant Amazon.com, Inc.’s (NASDAQ:AMZN) $897 billion, Alphabet Inc’s (NASDAQ:GOOG) (NASDAQ:GOOGL) $789 billion. Microsoft stock really is in a class of its own.
The market has rewarded MSFT as the Company has demonstrated to the world that they still are a force to be reckoned with. Those who wrote them off for dead have been having a serious case of ‘what could have been.’
Microsoft is the exception rather than the norm. It took a major shuffle at top management and several years to get the necessary turnaround, but the company’s strategies to stay relevant have worked. Other major tech companies that were at the forefront of the dot com boom (and subsequent bust) never rose again to their former glory, but Microsoft has done it.
Microsoft stock performance is up over 200 percent compared to just 84 percent for the Nasdaq over the last five years. Year to date, Microsoft has continued its upward momentum and outperformed major indices by a wide margin. With catalysts forthcoming in cloud and gaming products, it seems like an effortless climb to $150 per share.
The Future of Gaming
Leading up to the much anticipated E3 2019, a gaming expo known for big announcements on games and next-generation consoles, and an overall showcase. Notably, Sony Corp (NYSE:SNE) will not be attending because it wants to “experiment with new ways to delight gamers.” If Sony and its PlayStation team are not there to present, Microsoft has a good chance of stealing the show.
Even for those who are not of the gaming community, the event is pretty exciting. This is when Microsoft will probably lay out more specific timing for the rollout of the various games and consoles in development for this year and 2020. In a category where they have lagged, they have a big chance to turn the tide.
At last year’s E3 conference, Phil Spencer, Head of Gaming at Microsoft, disclosed that the company had added five more creative teams to the Microsoft Studios family. He revealed that his teams were designing the architecture for the next generation of Xbox consoles. This year, Spencer should be unveiling the progress as a result of these additions.
Expect big things.
Microsoft Stock and Project Scarlett
Project Scarlett is the collective name for two next-generation Xbox consoles, one codenamed Anaconda and the other Lockhart. Anaconda is rumored to be the more powerful console with a solid state drive, while Lockhart will be priced lower and likely use the xCloud game streaming service.
It’s a smart move to expand the team to monetize different categories of gamers. Broadly speaking there are casual players and hardcore gamers.
It’s an important time for Microsoft if they are to catch up to Sony. The Xbox One never quite took off, and the PlayStation4 dominated console sales. Although the numbers are a little dated, we know that Microsoft sold roughly 30 million Xbox Ones by the end of 2017, while Sony crossed the 73 million mark at the same time.
That’s why Project Scarlett is important. It’s Microsoft’s chance to close the gap and take the lead in gaming.
Project XCloud and Microsoft Stock
There also is the prospect of a date for when the xCloud beta will be revealed. xCloud will allow Xbox games to be played on a variety of non-PC devices like smartphones and enable Bluetooth-powered Xbox controllers. Basically, it’s the same games at high quality with multiple device compatibility, which is important to gamers.
Sony has already rolled out a PlayStation Now subscription service that allows PlayStation 4 players to stream games from the cloud, and Microsoft is following in suit.
On the gaming and cloud front, Microsoft is closing the gap. The E3 announcements could give investors confidence in the company’s ability to keep on forging ahead across all categories. This would result in a continued upward trend.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.