Microsoft’s AI Masterplan: Why MSFT Stock Is a Must-Hold for the Long Haul

Stocks to buy

Now the worlds’ most valuable company, Microsoft (NASDAQ:MSFT) stock rightly deserves plenty of attention in the market. The company is the top choice for institutional money managers in the U.S. tech sector.

Microsoft has increasingly strategically positioned itself for the AI surge with investments in OpenAI and other diversification efforts.

Its Microsoft Cloud segment drove significant revenue growth, while gaming and acquisitions expanded market reach. Long-term investors have benefited from substantial returns, with shares surging 69% over the past year alone.

Microsoft continues to invest in cloud technology and developing AI GPU chips to reduce dependence on other companies.

Azure, its main growth driver, saw a 31% increase in revenue this past quarter on a year-over-year basis. Integrating AI into Copilot attracted 1.3 million developers and 50,000 enterprise subscribers. That’s a trend investors are paying attention to.

Operating systems remain vital, ensuring sustained revenue. With an 8% year-to-date increase and trading at $402, MSFT boasts a 58% surge in the past year, offering a 0.75% dividend yield.

Recent MSFT Stock News

Microsoft officially confirmed its upcoming event, “New Era of Work,” scheduled for March 21, 2024, at 9 AM PDT, promising announcements on AI integration with Copilot, Windows, and Surface.

Anticipate hardware and software updates revealed, including the Surface Pro 10 with Intel and ARM chips and OLED displays and the Surface Laptop 6 with redesigned features like narrower bezels and more USB-C ports.

While pricing remains undisclosed, rumors suggest April availability for Intel-based models and June for ARM-powered versions.

In other news, Microsoft ceased support for its Android subsystem in Windows 11 by March 5th, 2025, after initially planning to integrate Android apps three years ago.

Users can still access existing Android apps but won’t download new ones. The Amazon App Store and its apps will no longer be available on Windows 11.

Excellent Earnings

In the second quarter, Microsoft’s revenue distribution was diverse, with various segments contributing to the company’s overall success.

Microsoft’s generated 42% of its revenue from Intelligent Cloud, 31% from Productivity and Business Processes, and 27% from More Personal Computing. Revenue growth accelerated, mainly fueled by cloud and productivity segments.

In the past year, Microsoft’s Intelligent Cloud division, led by Azure, was the primary driver of its growth, fueled by investments in OpenAI’s AI tools.

Azure’s revenue surged 30% year over year in Q2, outpacing competitors like AWS and Google Cloud. CFO Amy Hood said Azure’s growth would remain stable, buoyed by AI contributions.

Strong Stance in the AI Race

Microsoft’s stock has thrived due to a surge in interest around generative artificial intelligence, anchored by its ownership of OpenAI and lucrative Co-Pilot revenues.

Analysts predict a 14% revenue and profit growth by fiscal 2025, surpassing $257 billion. Microsoft’s Azure cloud competes fiercely with Amazon while it adeptly integrates Generative AI across its software suite, unlike Alphabet’s competing priorities. 

CEO Satya Nadella has also helped Microsoft put the company back up to its feet after antitrust issues of the Cloud Czar.

Currently operating in multiple and diverse sectors, Microsoft is leading in gaming, AI, and cloud computing. It saw a substantial 18% revenue growth and a 33% improvement in net income.

This makes Microsoft a great buy and investors should hold on to their MSFT stock forever.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Articles You May Like

Top Wall Street analysts like these 3 dividend stocks for passive income
Wall Street Favorites: 3 Solar Stocks With Strong Buy Ratings for April 2024
3 Large Retailers Set to Deliver Explosive Returns
3 Stocks to Avoid Like the Plague if Interest Rates Keep Rising
Caution! 3 Scorching AI Stocks Getting Too Hot to Handle