Microsoft (NASDAQ:MSFT) continues to put on a clinic for investors in 2019, with MSFT stock up 49% so far in 2019.
All signs point to the company being on the path to a solid 2020 as well.
The Pentagon’s “Jedi” Cloud Computing Contract
Amazon’s (NASDAQ:AMZN) AWS dominates the headlines when it comes to cloud computing — or at least it did until October. That’s when the U.S. Defense Department announced that Microsoft’s Azure had won the competition for its “JEDI” contract, a deal that could be worth $10 billion over the next 10 years.
News of that victory caused an immediate pop in MSFT stock. And it’s been on an upward trajectory ever since then.
Microsoft may have lost the current generation game console battle to Sony (NYSE:SNE), but 2020 sees the cycle start all over again. Microsoft’s Project Scarlett will be taking on the PlayStation 5 next holiday season.
However, Microsoft has found a clever way to sell its forthcoming game console this year. The company is once again offering Xbox All Access bundles, just in time for holiday shopping. While that bundle includes an Xbox One or Xbox One X for this year, in 12 months that console can be exchanged for a new Project Scarlett upgrade.
What About Antitrust?
Microsoft was battered by antitrust investigations two decades ago. With the prospect of the company being broken up, MSFT stock tanked, cutting Microsoft’s market capitalization in half within a year. The company survived, but monopolistic behavior is once again a big issue in the tech world.
A growing concern facing investors in big tech companies over the past several years has been the specter of antitrust accusations. Regulators have been eyeing the tech giants and their power over consumers and their data. There’s a growing movement to break up monopolistic tech companies. And most of the big names have been frequently listed as targets: Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon and Facebook (NASDAQ:FB).
One big tech company that’s escaped the same sort of criticism and scrutiny is Microsoft.
The biggest challenge Microsoft has seen in this arena is its aggressive moves against Slack (NYSE:WORK), the workplace communication software company. Microsoft released a competitor in Teams and then included it for free with Office.
That strategy has hurt Slack, but as Chapman University law and economics professor (and former director of the FTC’s Bureau of Competition) Tom Campbell told Vox, it’s unlikely the FTC would pursue an antitrust case over this behavior. According to Campbell, because of competition (both Apple and Google offer popular productivity suites), it would be difficult to prove that Office has a monopoly. Moreover, giving away Teams for free is a benefit for consumers.
In other words, while the prospect of antitrust investigations has made some investors nervous about big tech stocks, Microsoft stock hasn’t had the same problem.
How has MSFT Stock Performed Compared to the Competition?
That 49% gain in MSFT stock price so far in 2019 has been impressive. It’s outperformed the broader markets by a considerable degree, while leaving some of the biggest names in tech in the dust. However, there have still been better bets among the tech giants.
Alphabet is up 28% on the year while Amazon has been held to 17% growth so far in 2019. Apple has managed to post an impressive 72% growth this year, despite struggling smartphone sales. Facebook — after taking fire for privacy issues and being used for election interference — has still posted 53% growth.
Microsoft stock may not have seen quite the level of growth in 2019 as Facebook and Apple. But few investors are going to argue with a 49% increase in the value of their investment. Add big dollar deals like the Pentagon cloud services contract and the 2020 release of Project Scarlett, and the future looks bright for Microsoft investors as well.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.