Microsoft (MSFT +1.47%) has achieved record heights since its founding almost 50 years ago, emerging as a leader in software. Brands such as Windows, Office, Azure, and LinkedIn have made the company integral to the daily productivity of millions of businesses and consumers worldwide. Microsoft's success has catapulted its stock by over 320,000% since it went public in March 1986.
The company's meteoric rise might make you doubt it has much more to offer investors. However, Microsoft is an ever-evolving and developing company that consistently profits from its innovations. Ongoing expansions in artificial intelligence (AI), cloud computing, video games, and more will likely provide significant gains over the long term.
So here's why it's not too late to buy Microsoft stock.
Cashing in on AI in the near future
The AI market has blown up this year, with OpenAI's launch of ChatGPT last November altering what people thought was currently possible with the technology. Microsoft has come out shining with its 49% stake in OpenAI after investing over $10 billion in the start-up since 2019.
The partnership allowed Microsoft to introduce AI upgrades across its product lineup, including its Office suite, Azure, and Bing. The company's expansion in the lucrative industry has yet to be reflected in the form of quarterly earnings boosts, with Microsoft saying in July that investors should expect "gradual" growth contributions from AI in fiscal 2024.
NASDAQ: MSFT
Key Data Points
However, Wedbush analyst Dan Ives believes it won't be long before the company sees significant gains from its AI offerings. Microsoft's cloud service Azure delivered solid growth over the last year, with revenue rising 19% year over year in its fiscal 2023 (ending in June). Meanwhile, Ives cites "a clear uptick in activity" on the platform with the introduction of AI tools, and believes it could exceed growth of 25% in Q1 2024.
Moreover, Microsoft CoPilot, an AI assistant that will be added to Microsoft 365, will soon debut for $30 per month on top of the current cost of the productivity platform. The feature will provide a wide range of new AI capabilities and could offer a massive boost to earnings in the coming months.
Microsoft 365 subscribers grew 12% to 67 million in 2023, becoming one of the fastest-growing parts of the company's business. CoPilot could attract new customers and see many current members upgrade their current subscriptions.
Microsoft offers consistent dividend growth
Microsoft has a long history of dividend growth, with its cash amount rising from $0.08 in 2003 to $0.68 in 2022. And last week, the company increased it again by more than 10% to $0.75. The rise indicates management is confident in the momentum of its business and cash flow.
The cloud giant's dividend yield of 0.87% might not hold a candle to what companies like Verizon and Coca-Cola offer, but it is one of the highest yields in big tech. Microsoft competitors like Amazon and Alphabet offer no dividends. Meanwhile, Apple's is significantly lower at 0.56%.
Microsoft boasts 19 consecutive years of dividend growth. The steady increase helps make up for the low yield, with its impressive stock growth over the years making it an excellent long-term buy. Microsoft shares gained 174% over the last five years, and have massive potential alongside an expansion into AI.
In addition to artificial intelligence, Microsoft's increasingly likely acquisition of Activision Blizzard will make it the third-largest video games company in the world. The merger will give the company access to a valuable game catalog that could attract millions of subscribers to its Xbox Game Pass platform.
Meanwhile, Azure's second-largest market share in cloud computing further strengthens Microsoft's long-term outlook.
The company has enjoyed decades of growth and will likely continue on its current trajectory thanks to its dominance across tech. As a result, it's not too late to profit from Microsoft's future, with its stock an attractive option right now.
