The Window to Buy Microsoft Stock at a Discount Is Quickly Closing

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In the wake of the novel coronavirus pandemic, markets experienced record selloffs. Even high-performance stocks like Microsoft (NASDAQ:MSFT) felt the impact.

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MSFT hit $188.70 on Feb. 10 before plunging to a $135.42 close on March 16. However, Microsoft stock has been a powerhouse for the past five years, and the coronavirus hasn’t been enough to keep it down.

In fact, the shutdown has helped to boost use of Microsoft products such as Skype, Teams and Xbox Live. With MSFT currently trading around $165, time is running out for investors looking to buy on the dip.   

Microsoft is a Machine

Coming into March, Microsoft was a company firing on all cylinders. Office 365 subscriptions were rolling in. Its Surface PC hardware was on the verge of becoming a $2 billion-per-quarter business. Last October, its Azure cloud computing division beat out Amazon’s (NASDAQ:AMZN) AWS for a high-profile U.S. Defense Department contract worth $10 billion. The company even managed to dodge getting dinged by the antitrust sentiment plaguing competitors like Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL).

The closest thing to a disappointment for MSFT investors in recent years was Sony (NYSE:SNE) trouncing the Xbox One with the Playstation 4.

Over the past five years, Microsoft stock has gained nearly 300% and even after the coronavirus market meltdown, the company’s market capitalization remains comfortably above the trillion dollar mark.  

Coronavirus Boost for Skype, Teams and Xbox Live

The coronavirus pandemic and resulting lockdown has seen the usage of some Microsoft products skyrocket. 

Zoom Video Communications (NASDAQ:ZM) saw a huge boost in use of its Zoom video meeting application, but that was soon derailed by security concerns. Meanwhile MSFT has seen its Skype video conference tool — featuring enterprise level security and Office 365 integration — post a 70% increase in use.

Teams is MSFT’s answer to Slack (NYSE:WORK). Microsoft’s group collaboration tool (and another Office 365 component) has seen its adoption surge. The company reported that by mid-March the total number of meeting minutes logged in Teams by users was up 200%.

Once life has returned to normal, the boost for Skype and Teams is going to help Microsoft sell more Office 365 subscriptions. Microsoft’s Xbox Live online gaming service has also seen a huge increase in usage. Demand actually brought the system to its knees several times in mid-March, although MSFT quickly added capacity and instituted measures such as shifting game downloads to off-peak hours.

Looking Ahead: Xbox Series X

The surge in demand for Xbox Live is also good news for MSFT. This fall the company is expected to launch its next generation video game console, the Xbox Series X. All the time playing video games is going to help prime the pump for a new experience.

Xbox One sales never lived up to expectations and had been dropping considerably in recent months as gamers waited for the next generation consoles to arrive. Microsoft gets another chance to take on Sony and even if the Xbox Series X doesn’t take the crown from the Playstation 5, MSFT stock is going to see the upside of holiday console sales.

Bottom Line on Microsoft Stock

Virtually all stocks have been seen their value slump significantly in the wake of the coronavirus pandemic. However, few of those are seen as the buying opportunity that MSFT is.

Of 34 investment analysts surveyed by Wall Street Journal, 27 have Microsoft stock rated as a buy with another four rating it as overweight. Those numbers have been virtually identical for the past three months. The current average 12-month price target is $188.90, representing 14% upside. 

MSFT is rapidly bouncing back from its low close of $135.42, in the aftermath of the big market selloff in March. It’s up nearly 22% since that low point. In fact, MSFT has now posted a 4.7% gain so far in 2020 — despite the coronavirus outbreak. If you have any interest in adding Microsoft to your portfolio at a discount, you’ll need to act quickly.

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

Brad Moon has been writing for InvestorPlace.com since 2012. He also writes about stocks for Kiplinger and has been a senior contributor focusing on consumer technology for Forbes since 2015.


Article printed from InvestorPlace Media, https://investorplace.com/2020/04/the-window-to-buy-msft-stock-at-a-discount-is-quickly-closing/.

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