Just imagine: It’s late February 2020 and the stock market is about to crash, but most people aren’t aware of it. You bought Microsoft (NASDAQ:MSFT) stock at the worst possible time — right before the Covid-19 crisis came to America. As it turns out, simply holding on to your $1,000 investment would have been an excellent strategy. Furthermore, there are reasons to consider a stake in Microsoft right now.
If you’ve been investing for a long time, you may recall that Microsoft was an edgy, hypergrowth business during the early days of the internet. Somewhere along the way, however, Microsoft became a relatively safe, “steady Eddie” kind of company that your grandparents might invest in.
The recent popularity of machine learning has changed people’s perceptions of Microsoft, though. That’s not necessarily a bad thing, as Microsoft might need to ruffle a few feathers to regain top-of-mind relevance and push the company’s share price back to fresh highs.
Here’s What Happened to $1,000 Invested in MSFT Stock
Let’s pretend your name is Unlucky Louie. Unfortunately, you invested $1,000 in MSFT stock at $185 per share in February 2020. Within a few weeks, the Microsoft share price plunged to the $130 range.
Despite your terrible luck, let’s say you had the emotional strength to hold on to your investment in Microsoft. After all, great businesses tend to withstand crises, even if they’re as terrifying as a global pandemic.
All you had to do was hold on, as MSFT stock recently traded at around $250 per share. Thus, a $1,000 investment when Microsoft shares traded at $185 apiece, grew 35% to $1,350.
That’s a pretty decent return on your investment, Unlucky Louie. It just goes to show that panic-selling is rarely, if ever, the ideal strategy when the going gets tough.
Microsoft Can Dominate Generative AI During the Next Three Years
What about the next three years, though? Does it make sense to continue holding MSFT stock? If you have a bullish outlook on generative/conversational artificial intelligence (AI), the answer is definitely yes.
As you’ve probably heard by now, Microsoft is taking an early lead in the race to dominate generative AI. That’s because Microsoft invested in ChatGPT developer OpenAI in 2019 and 2021, and is investing billions more into the company this year.
Microsoft has already integrated ChatGPT’s technology into its Bing search engine. Plus, the company has “started discussing with ad agencies how it plans to make money” on Microsoft’s AI-enhanced search engine, according to a Reuters report.
The new Bing Chat has been called “a highly engaging experience.” Sure, there are issues to fix and growing pains to overcome. However, Microsoft assures that it has “implemented some changes to help focus the chat sessions.” So, expect improved search-and-chat experiences as AI-infused Bing makes waves throughout the tech landscape.
What You Can Do Now
As we’ve discovered, $1,000 invested in Microsoft delivered powerful results despite the Covid-19 crisis. The past is gone, however, so traders have to make decisions about the here and now.
Personally, I feel it’s not a bad idea to invest $1,000 (or more, as long as it’s not more than 2% of your portfolio) in MSFT stock. With its ambitious foray into machine learning, Microsoft remains relevant and, possibly, somewhat controversial. If you’re on board with this, though, then consider taking a reasonably sized stake in Microsoft for 2023.
On the date of publication, David Moadel 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.