Here’s Why Long-Term Investors Should Buy and Hold Microsoft Stock

MSFT is quickly becoming a leader in a $182.4 billion cloud market

Microsoft (NASDAQ:MSFT) is one of those stocks I wished I had mortgaged the house on. In 2010, the tech giant traded at just $22.15 a share. Now, just nine years later, it’s at an all-time high of $145.50 with further upside likely.

Source: dennizn / Shutterstock.com

That’s especially true after winning the U.S. Department of Defense’s 10-year $10 billion JEDI contract, prevailing over Amazon (NASDAQ:AMZN) and Oracle (NASDAQ:ORCL).

That contract is a pretty big deal, too. After all, winning such a deal only raises Microsoft’s status in the cloud computing market. It also highlights the emergence of Microsoft’s Azure cloud as a major challenger to Amazon’s Web Services (AWS).

Wedbush analyst Dan Ives says the deal is a “game changer” for Microsoft, noting it “will have a ripple effect for the company’s cloud business for years to come.”

RBC Capital Markets notes, “In a world increasingly moving to the cloud, but still encumbered by legacy investments that sit elsewhere and still drive value today, Microsoft is uniquely positioned to take an increasingly large percentage of corporate IT budgets in a hybrid world.”

Plus, with the global cloud market is expected to grow 17.5% this year to $214.3 billion from $182.4 billion in 2018, according to Gartner Research, MSFT stock could be a major beneficiary. All as the company sees bigger revenue and profit growth.

The Force Is Strong with Microsoft

Up over 410% since 2010, Microsoft has remained a strong investment – one I’m still kicking myself for not buying at less than $25 a share. In recent weeks, the company posted first quarter earnings that again beat expectations with EPS of $1.38 on sales of $33.06 billion. A year ago, the company earned $1.25 a share on sales of $32.15 billion.

It also appears that Microsoft’s cloud business is growing faster than Amazon’s AWS. “For the Jun. 2019 quarter, as an example, Microsoft said Azure grew 64% year over year, while Amazon said AWS grew by 37%,” as reported by Motley Fool contributor Danny Vena.

That’s not the only reason I like MSFT stock, though. The company just boosted its quarterly dividend by 11% to 51 cents a share, payable Dec. 12 to shareholders of record on Nov. 21. The board of directors also just approved a new buyback program, authorizing up to $40 billion in share repurchases.

The Bottom Line on MSFT Stock

With Microsoft quickly becoming a leader in the cloud market, it’s tough to bet against the stock at the moment. In fact, I believe MSFT stock could easily test $180 a share near-term based on the strength of the cloud market alone. That becomes even easier to forecast with an increasing dividend yield and stock buybacks.

Even better, the JEDI contract will allow MSFT to expand, and help lead it to sustainable revenue and profit growth. Of course, that will lead to higher highs in a stock I should have bought nine years ago at less than $25 a share.

In short, there’s really nothing standing in the way of higher highs with MSFT.

As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2019/11/heres-why-long-term-investors-should-buy-and-hold-microsoft-stock/.

©2019 InvestorPlace Media, LLC