Microsoft Proves It’s Still an Innovator (And Profitable)

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The key to making money as a growth investor is simple: Invest in healthy, vital, growing companies. I’m not interested in the fads — the “flash in a pan” stocks. I want the companies’ stocks in great niches that historically dominate their corner of the market.

microsoft stock
Source: The Art of Pics / Shutterstock.com

But that’s certainly no easy task. So, a company must have a tried-and-true business that works for it — and be able to innovate to continue gaining market share.

Microsoft Corporation (NASDAQ:MSFT) is a perfect example. But before we get to the numbers, let’s take a step back and look at just how MSFT came to be the tech behemoth it is today.

Before Bill Gates set his sights on a vaccine for the coronavirus, he was probably one of the most well-known Harvard University dropouts. At a young age, Gates had a proclivity for math and science and was soon captivated by the inner workings of computers. Not surprisingly, he achieved a near perfect score on the SATs, which enabled him to enroll at Harvard.

However, Gates dropped out of Harvard after only two years when he decided to start his own company, Microsoft Corporation, with his friend, Paul Allen. Both were excited about the future of personal computers, and the first product that they developed in 1975 was a BASIC software that ran on the Altair computer.

In the following years, Gates and Allen developed several other programming languages, and in 1980, the two were tasked with developing software for IBM’s first personal computer. The MS-DOS operating system was born and used on the IBM personal computer in 1981. By the early 1990s, more than 100 million copies of the MS-DOS system were sold.

More recently, Microsoft Corporation is most known for its Windows operating systems. There are currently more than 900 million devices utilizing the latest Windows operating system, Windows 10. But Microsoft Corporation offers much more than just Windows, including cloud platform Azure, LinkedIn, Xbox hardware and software, the Bing search engine, Microsoft Office and Microsoft Teams.

Released in 2017, Microsoft Teams has become a critical tool for the workforce today, as many companies have gone remote. And Teams is a perfect tool for employees to connect remotely, with its video meetings, workplace chat and shared file features.

What’s especially interesting about Teams is Microsoft’s usage of artificial intelligence (A.I) to create a real-time noise suppression.

Let’s be honest, working from home can be noisy. You might be on a conference call, but so far there’s been no way to completely cut out background noise, whether it be a dog barking, loud typing or talking.

Until now.

With this new feature, the real-time noise suppression can distinguish between a voice and other noises, so your fellow conferencers only hear speech on the call.

Source: YouTube

While noise suppression technology has been used in Teams and other business apps for some time, its only features are to suppress stationary noise, like a computer fan. This new one will also filter out non-stationary noises, using a new speech recognition software that distinguishes between speech and noises, like a door slamming or a dog barking.

But a new speech suppression feature isn’t the main reason why I like Microsoft, or why I expect it to continue to expand. Its earnings are healthy, too. And strong earnings are critical to future growth.

Case in point: Microsoft’s latest earnings report. On Wednesday, the company topped analysts’ earnings and revenue forecasts for the third quarter fiscal year 2020. Thanks to its remote teamwork offerings — Microsoft Teams — and other software, the coronavirus outbreak had a minimal impact on Microsoft’s business during the quarter.

In fact, in April, Microsoft Teams brought in more than 200 million meeting users in one day. This equates to 4.1 billion meeting minutes.

First-quarter revenue increased 15% year-over-year to $35 billion, and earnings jumped 22% year-over-year to $10.8 billion. Earnings per share grew 23% year-over-year to $1.40 per share. The consensus estimate called for earnings of $1.26 per share on $33.6 billion in revenue, so MSFT posted an 11.1% earnings surprise and slight revenue surprise.

Microsoft also continued to reward its shareholders during its third quarter. The company returned $9.9 billion in stock buybacks and dividends, which represented a 33% increase over the third quarter in fiscal year 2019.

This is the exact kind of growth stock I like to invest in, which is why I recommended it in my Growth Investor service back in February 2020 and made it a Top 5 Stock in my May Monthly Issue.

Of course, there are plenty of other growth stocks on my Growth Investor Buy List, several of which incorporate A.I., too. However, the A.I. stock I’m most excited about actually provides the technology for other major tech companies, like Microsoft and Google (NASDAQ:GOOGL).

I call it the A.I. Master Key.

Not only does the company make the “brain” that all A.I. software needs to function, but it dominates its corner of the market in doing so.

So, it doesn’t really matter which competitor wins the A.I. race, because this company’s technology is used by all of them; therefore, its investors will profit off of all the A.I. success.

The company is set to its quarterly earnings report in late May. I expect this A.I company to release strong results, which should drop kick and drive its shares higher. If you want to get in before the stock takes off, now is the perfect time to do so.

I’ll tell you everything you need to know, as well as my buy recommendation, in my special report for Growth InvestorThe A.I. Master Key. The stock is currently sitting pretty with an over 70% return on my Growth Investor Buy List, but it still under my buy limit price —  so you’ll want to sign up now; that way, you can get in while you can still do so cheaply. (And earn a dividend to boot!)

Click here for a free briefing on this A.I. innovation.

Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/market360/2020/05/microsoft-proves-its-still-an-innovator-and-profitable/.

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