Why microsoft (MSFT) is a Must-Have Mega-Cap Tech Stock for Every Investor

The Rise of MSFT in 2024

Microsoft (NASDAQ: MSFT) has emerged as a top tech stock to buy in 2024. The company continues to capitalize on two major trends.

Azure serves as a premier AI infrastructure platform, while the company pioneers AI integration across tools like Copilot and applications such as Nuance Dax in healthcare. This will have important implications for MSFT stock holders in the future.

Financial Performance and Growth

With a 56% year-to-date surge and a 272% gain over the past five years, there’s a reason why microsoft continues to be among the most valuable companies in the world.

Beyond its 0.80% dividend yield, the company’s strength lies in versatility, high profit margins, and robust growth.

Leadership in Cloud Computing

Microsoft Azure, a leading Cloud computing application, fuels a 21% year-over-year increase in “server products and Cloud services” revenue.

Analysts foresee widespread enterprise adoption, with a $450 price target, emphasizing Microsoft’s leadership in AI and cybersecurity amid escalating ransomware threats and new SEC disclosure rules.

The Bull Case

In 2019, Microsoft invested $1 billion in OpenAI, later increasing its stake to 49%. This partnership provided exclusive access to advanced AI technology, leading to the integration of AI features across Microsoft’s products.

Over the past year, Azure, Bing, and Office received significant AI enhancements.

Continuous Growth

microsoft demonstrated robust profitability, achieving a net income of $16.6 billion in fiscal year 2018 and $73.4 billion in fiscal year 2023, boasting a notable CAGR of 34.6%.

In comparison, Alphabet and Apple recorded net income CAGRs of 36.4% and 10.3%, respectively, over the same five-year period.

Strategic Investments

Despite Microsoft’s $69 billion acquisition of activision blizzard, the company maintains a strong balance sheet with $72.4 billion in net cash, ensuring financial stability and flexibility for future growth and shareholder returns without the burden of net debt.

Microsoft strategically invested in gaming and Artificial Intelligence for future growth.

Opportunities for Investors

microsoft is a stalwart in index funds, boasting over 50% year-to-date gains and a robust 272% surge in the past five years.

Continuously outperforming, its substantial investment in OpenAI positions it to capitalize on the AI surge.

Investment Outlook

With a revenue of $56.5 billion, a 27% year-over-year increase in net income, and a 0.80% dividend yield, MSFT stock emerges as a top long-term choice for 2024.

Positioned for significant growth beyond 2023, microsoft, boasting a strong performance over the past decade, aims to reach $500 billion in revenue by 2030.

Conclusion

Microsoft’s continued innovations in the tech industry, strategic investments in AI and gaming, and impressive financial performance make it an attractive option for investors looking for long-term growth and stability.

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.

Source: investorplace