This Is My Highest Conviction Stock Among Major Brands

Microsoft (MSFT 1.44%) is what business is built on, and this is becoming more and more of the case as we increasingly move to cloud services. In this Motley Fool Live segment from "The Rank," recorded on March 14, Fool.com contributors Travis Hoium and Jason Hall discuss Microsoft's many strengths. 

Travis Hoium: Microsoft, a giant company, we all know. I think the elevator pitch here is, of all of these eight companies, if Microsoft stopped working tomorrow, the world would be in big trouble. It is the only company on this list that we can say that for. You can buy phones from people other than Apple, you can use other search engines other than Google. We can do without Facebook. Microsoft is what business is built on. This is becoming more and more of the case as we move to more and more cloud services.

Interesting stat, we're thinking what either us being the cloud play, Azure grew at 46 percent revenue growth last quarter. AWS grew at 40 percent. This is actually been the case for a while, Azure is smaller than AWS and has been for a while, but it is growing faster. It's because they're integrating into all of Microsoft other businesses and services. I just think this is a rock solid business. Honestly like lots of other businesses that are built on top of their platform play. They've always been a platform company and that's a really great place to be from an investment perspective. I had it highest, which may not be surprising based on my thoughts there.

Jason Hall: You ranked it third, I ranked it fifth, and I'll say this too. Of all of the rank shows that I've been on, this was the hardest for me to rank. It really was. I ended up following Travis as advice and ranking them in reverse order, and I ranked Microsoft fifth. Towards the back end, but a little more middle of the pack. Danny ranked at seventh. I will say that I ranked it fifth, because as large as it is, as large its revenues have become, I do think that it can continue to grow. I just wonder if we will not see more commoditization of the pricing of the cloud that is going to start weighing on those margins a little bit over the next 5-10 years, I think to a certain extent that's going to be a bit of a reality that margins are going to get squeezed there as pricing comes down because there's only so much.

I think with Microsoft, they have so many things, again, that platform with all of their different things. But regulators have basically told them, "Look, you can't make any of your different businesses too tied to any of the others, because it's anti-competitive. You can't do it." It's going to be really hard for Microsoft, I think, to create real durable competitive advantages with things like Azure. At the end of the day, it is going to be a lot about pricing and performance. That's probably the biggest reason I rated it as low as I did. But man, this is a wonderful business.