What a year for Microsoft (MSFT +0.66%). The tech stalwart kicked off 2023 by hitting a 52-week low of $219.35 on January 6. Then Microsoft-backed OpenAI's ChatGPT grabbed headlines as artificial intelligence exploded into prominence.
Since then, Microsoft shares have risen steadily, reaching a 52-week high of $384.30 toward the end of November, illustrating just how far the stock has come from the start of the year. So is it too late to purchase the tech giant's stock?
The share price has pulled back from its recent high, creating a potential buy opportunity. Let's analyze where the company is at currently to determine if now is a good time to buy.
NASDAQ: MSFT
Key Data Points
Microsoft's capacity for success
Microsoft is capitalizing on some of the hot technological trends of our time. The company is prospering as it pursues market share in cloud computing and artificial intelligence.
This is illustrated by Microsoft's performance in its fiscal 2024 first quarter, ended September 30. The company's Q1 revenue experienced double-digit year-over-year growth, hitting $56.5 billion. Moreover, net income saw an impressive 27% year-over-year jump to $22.3 billion.
Microsoft's Q1 prosperity isn't just confined to 2023. The tech veteran's revenue has risen steadily over the years, showing it's on a streak of multi-year growth thanks to its success tapping into cloud computing and AI technologies.
Data by YCharts.
That success should continue. The company forecasted double-digit revenue growth in fiscal Q2 across many of its offerings, including its Azure cloud computing business. Azure falls under the company's Intelligent Cloud division, which produced $24.3 billion of fiscal Q1's $56.5 billion in sales.
In fact, Microsoft CFO Amy Hood stated, "with our strong start to FY24, I am confident that as a team, we will continue to deliver healthy growth in the year ahead driven by our leadership in commercial cloud and our commitment to lead the AI platform wave."
Microsoft's many strengths
The Microsoft team has good reason to believe the company's current success will continue. The cloud computing and AI technologies at Microsoft's disposal are impressive.
It has data centers in over 60 regions around the world. This widespread coverage means Microsoft's systems are fast, since customers using the company's cloud computing and AI technologies are likely to have a data center close to them.
This massive data center footprint helped Microsoft secure an exclusive partnership with Oracle, allowing the latter's more than 400,000 customers to access Azure. As for AI, over 18,000 organizations use Microsoft's artificial intelligence technology. This has translated into tangible business results for Microsoft.
For instance, the company's Dynamics 365 product, a Salesforce competitor in the customer relationship management (CRM) space, experienced 10 consecutive quarters of market share gains through fiscal Q1, helped by AI features such as automating sales tasks. Microsoft CEO Satya Nadella described Dynamics 365 as an "AI inflection point to redefine our role in business applications."
Moreover, Microsoft's Xbox gaming division should get a significant sales boost in fiscal 2024. The company's acquisition of gaming giant Activision Blizzard closed on October 13th.
And it doesn't end there. Microsoft's financial strength is impressive. The company exited its fiscal Q1 with total assets approaching a staggering half a trillion dollars. Cash, cash equivalents, and short-term investments alone totaled $144 billion. Total liabilities were a manageable $225.1 billion.
To buy or not to buy Microsoft stock
So much is going right for Microsoft at this time, and the company even provides a modest dividend, currently yielding 0.8%, as the cherry on top for investors. Microsoft increased its dividend by 10% this year, and has raised it annually for more than a decade.
Microsoft is the second-largest cloud computing provider in the world, behind only Amazon. The public cloud computing market, where Microsoft's Azure operates, is forecasted to grow over 78% between 2023 and 2028.
Meanwhile, the AI market is estimated to increase from $142.3 billion in 2022 to $1.8 trillion by 2030. The industry growth in AI and cloud computing provide a tailwind to help Microsoft's revenue continue its multi-year rise. The company's impressive technological capabilities position it well to maintain its prosperity, making Microsoft a worthwhile tech stock to buy now.
