![]() ![]() After all, the consensus forecast among analysts covering the stock calls for top-line growth of over 11% in fiscal 2024. The good news is that Wall Street has remained fairly optimistic about Microsoft's near-term growth prospects, despite the possibility of an economic recession in the U.S. Making matters worse, an economic downturn could weigh on consumer discretionary spending later this year, an event that may dampen the tech giant's earnings power in core segments like advertising, devices, and gaming. Put simply, most of Microsoft's anticipated growth over the next year in cloud-computing, gaming, and business intelligence solutions appears to be baked in at this point. With an earnings yield of 3.11%, Microsoft's stock is expensive relative to many of its large-cap tech peers, as well as so-called risk-free assets like the 10-year U.S. ![]() That being said, there are some solid reasons investors may want to take a cautious approach with this highly diversified tech company - at least in the near term.įirst and foremost, Microsoft stock trades at a nosebleed premium. I'm extremely optimistic about the long-term prospects for the tech giant's cloud-based computing Azure platform, its business intelligence solutions unit known as Power Platform, and its top-shelf gaming franchise. ![]() George Budwell: Admittedly, I am actually a full-on bull in regard to Microsoft stock. Valued at roughly 32 times this year's expected earnings, Microsoft undoubtedly trades at a premium, but the company is in great shape and poised to deliver for investors over the long term. The software giant also has potentially revolutionary artificial intelligence services of its own being deployed and developed, and AI technologies could wind up giving powerful boosts to the company's key business units. Through its $10 billion investment in OpenAI and partnership with the company, Microsoft has a big stake in ChatGPT and Dall-E. Microsoft is also arguably the current leader in the red-hot artificial intelligence space. Revenue for the intelligent-cloud segment, which houses the Azure business, grew 16% year over year to reach $22.1 billion, and Microsoft is positioned to benefit from secular tailwinds in the cloud services space. Azure continues to be a standout performance driver. The company's 7% year-over-year sales growth and 10% growth might not look mind-blowing at first glance, but the performance highlighted just how sturdy the software leader is.Įven with revenue for the company's Windows OEM and devices units declining 28% and 30% in the quarter, respectively, Microsoft was still able to serve up solid growth. Microsoft posted roughly $18.3 billion in net income and per-share earnings of $2.45 on sales of $52.9 billion, while the average analyst estimate had guided for earnings per share of $2.23 on revenue of $51 billion. Results for the company's third quarter, which ended March 31, came in significantly better than the market had anticipated. Thanks to these catalysts and factors, Microsoft stands as one of the world's most profitable companies, and it's safe to say the business has never been stronger. It's also effectively managed its costs while pursuing growth initiatives. It's scored huge wins in the cloud-infrastructure space, with the company's Azure service second only to Amazon's offering and still gaining market share. The software giant has successfully transitioned its productivity software to a more profitable, more predictable subscription-based model. Keith Noonan: Microsoft has racked up incredible successes and transformed its business over the last decade. Bull case: Thriving core businesses and huge AI potential
0 Comments
Leave a Reply. |