Prices for Microsoft (NASDAQ:MSFT) stock, combined with the notion that it is among secular tech winners, mean it’s a steal at the moment. Simply consider that it’s down 22% in 2022, but that it has massive upside of 35% based on target prices — and its attraction is obvious. But without any signal that the tech wreck will relent, or at least spare Microsoft, it’s difficult to move on that notion.
The good news is that there are signals the tech wreck is slowing, or at least that the tech wreck is beginning to show a distinction between the winners and the losers. Those signals came in the form of recent comments from Wedbush analyst Daniel Ives. He believes that strong tech firms underpinned by secular drivers have a strong chance of emerging relatively unscathed.
In other words, he believes that previously noted secular drivers including cloud, cyber security, and the new digital age aren’t going anywhere.
That means that a select few tech names, including Apple (NASDAQ:AAPL), Salesforce (NASDAQ:CRM), and Microsoft may be reaching an inflection point. Investor capital, which fled every tech name through the first half of 2022, should flood back into the so-called secular winners within tech moving forward.
There’s some indication that this could already be underway based on price charts. On Jun. 13, MSFT stock closed at $242.26, dipping to its lowest point this year. Since then, it has moved above $260.
The idea here is that Microsoft will decouple from the overall market downturn. It has tracked overall losses fairly well so far. But the more investors recognize its true strengths, the higher it will go regardless of overall market trends.
Right now, a lot of that strength lies in perceptions of cloud performance and what the cloud means overall.
If the cloud argument doesn’t sway investors, overall performance should. The company recorded $49.4 billion in revenues in the most-recent quarter. A year ago, that figure was less than $42 billion. At that time, many had to wonder how much bigger Microsoft could get. The answer was 18% in a year.
As Wedbush’s Daniel Ives noted, the cloud is a secular trend that isn’t going anywhere. Its importance will remain. The positive news there is that Azure and other services increased 46% as of the firm’s April earnings release.
Microsoft doesn’t break out Azure revenues separately from overall revenue figures, so we can’t know exactly. But Azure’s massive growth coupled with its firm position as one of the big three means that as long as the cloud drives tech, Microsoft remains a premier name.
So, Ives’ assertion that it still means as much as it did before underpins his belief that Microsoft must remain a secular winner. That’s a pretty easy bet to take.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.