Once an operating-system innovator, Microsoft (NASDAQ:MSFT) is now a power player in artificial intelligence enhanced software and services. Sure, earnings events can create a sense of uncertainty. Yet, investors should consider holding some Microsoft stock shares, albeit without over-leveraging themselves.
Microsoft CEO Satya Nadella declared that the company has “moved from talking about AI to applying AI at scale.” Furthermore, Microsoft is “infusing AI across every layer of” the company’s “tech stack.”
There’s no denying it: Microsoft stock provides direct exposure to best-in-class AI-enabled products. So, even though there’s a crucial event coming up soon, it still makes sense to keep at least a handful of Microsoft shares in your portfolio.
Microsoft Invests Globally in AI and Cloud Growth
Microsoft has already disclosed financial commitments to grow its AI and cloud-computing market presence in Europe. The company’s regions of interest include the United Kingdom and especially London, Germany and Spain.
Apparently, Microsoft’s next target of AI and cloud growth is Japan. Specifically, the company plans to invest $2.9 billion during the next two years to build out its cloud and AI infrastructure in Japan.
Granted, there are risks involved in spending billions of dollars on these projects. It’s a sensible and forward-thinking move for Microsoft to scale out its cloud and AI infrastructure.
Again, Nadella assured that Microsoft is “applying AI at scale,” i.e., walking the walk instead of just talking the talk. In order to defend its moat (to borrow a Warren Buffett term), Microsoft has to think globally and invest money now in order to ensure a competitive edge in the future.
A Big Day Is Coming for Microsoft
Now, here’s a day you need to mark on your calendar. Microsoft will release its financial results for the third quarter of fiscal 2024 on April 25.
Analysts expect Microsoft will have earned $2.81 per share. That’s actually a fairly muted expectation, since Microsoft earned $2.93 per share in the second quarter and, prior to that, $2.99 per share in the first quarter.
Microsoft guided for Intelligence Cloud third-quarter revenue of $26 billion to $26.3 billion. As Barron’s pointed out, the “upper end of this range marks quarter-over-quarter growth of just 1.5%, compared to the quarterly growth rate of 6.6%” reported in the second quarter.
We’re not suggesting that the expectations are ultra-low; this is Microsoft we’re talking about, after all. Rather, Microsoft has a fair shot at delivering a positive quarterly surprise.
Microsoft Stock: Measure Your Allocation Carefully
So, what can you do as April 25 approaches? You don’t have to panic-sell your Microsoft share position, as this is a rock-solid tech titan that can withstand just about any event.
What you can do, however, is maintain an appropriate position size. If you own index funds, you might already be indirectly invested in Microsoft. On top of that, you may choose to own a few Microsoft shares to boost your AI and cloud market exposure.
Ultimately, Microsoft stock earns a “B” grade and is appropriate for most portfolios. Just make sure that your position size is well-considered, especially with the big quarterly event coming up soon.
On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
