Microsoft share price forecast 2019: a repeat of the cycle from “mature” to “growth” stock

 

It’s difficult to imagine the contemporary world without Microsoft and its extensive array of products. Windows, utilized by nearly 78% of global desktop users, remains ubiquitous. Interestingly, even while writing this article on my MacBook, Microsoft Word is my tool of choice. With that in mind, what insights can we glean regarding the tech giant’s performance in 2019? Let’s delve deeper to assess whether it might present promising trading prospects as the year draws to a close.

Crucial Details About Microsoft

Microsoft stands as one of the world’s largest and most prosperous technology enterprises. Since its inception in 1975, the company has demonstrated a remarkable track record of success and consistent growth. In 2018 alone, Microsoft garnered a staggering $110 billion in global revenue, marking a historic high for the corporation. This growth has translated into substantial wealth for Microsoft’s key figures, including luminaries such as Bill Gates, Paul Allen, and others, who have amassed multibillion-dollar fortunes.

Personal Computing Continues to Reign Supreme

Personal Computing remains the predominant segment for Microsoft, and this comes as no surprise. This division encompasses sales of Windows OS, revenues from Xbox gaming software and hardware, and advertising earnings. Microsoft’s Windows OS continues to lead the global personal computer operating system market. Having spearheaded technological transformations globally for four decades, Microsoft continues to exert its dominance in the tech sector. Microsoft’s SWOT Analysis Strengths (S):

• World-renowned software developer and a major player in cloud computing (earned $23.2 billion in 2018)
• The world’s largest company, ranking fourth with a market value of $750.6 billion
• Extensive market reach, operating in over 190 countries with 700 million installations
• A dedicated customer base, enjoying a consistently strong reputation that has fostered customer loyalty over the years
• Significant market capitalization at $776 billion, making it one of the world’s largest high-tech firms
• Consistent company growth

Weaknesses (W):

• Overreliance on the PC market
• Vulnerability to cybercrime
• Perception of lacking innovation
• Shortcomings in the internet browser segment

Opportunities (O):

• Expansion of cloud business: Microsoft’s cloud services, including Azure, Office 365 Commercial, and Dynamics 365, have gained immense popularity, offering room for further growth
• Embracing artificial intelligence and innovation, particularly in gaming and AI technologies
• Pursuit of strategic acquisitions and partnerships, such as the purchase of LinkedIn for $26 billion and Skype for $8.5 billion, to bolster market share
• The burgeoning smartphone and tablet market, despite fierce competition from major rivals like Apple and Google

Threats (T):

• Lack of diversity within Microsoft’s workforce
• Aggressive competition in the tech sector
• Consumer preference for mobile over desktop
• Open-source projects providing free services

Major Rivals of Microsoft

Although Microsoft enjoys a reputation for tech sector success, it contends vigorously with a variety of rivals. Two prominent adversaries are Google and Apple. Apple: While Microsoft maintains its supremacy in the global PC market through the enduring popularity of Windows, Apple has successfully carved out a significant niche with groundbreaking products like the iPod, iPad, and iPhone. In the realms of tablets and smartphones, Apple outpaces Microsoft, even though Windows still reigns supreme in laptops and desktops worldwide. Google: Microsoft and Google are formidable competitors across numerous spheres, including search engines (Google vs. Bing), mobile operating systems (Android vs. Windows Phone), cloud platforms (Google App Engine vs. Windows Azure), productivity suites (Microsoft Office vs. Google Apps), web browsers (Google Chrome vs. Internet Explorer), and operating systems (Windows vs. Chrome OS). Google, akin to Microsoft in its prime, has displayed a remarkable capacity to enter new markets and assert dominance. Other notable competitors for Microsoft include SAP, IBM, and Oracle.

Microsoft’s Share Price History

Few companies have enjoyed the sustained success witnessed by Microsoft over the years. Microsoft has constructed a long-lasting franchise that has delivered consistent revenue for its investors for decades. Analyzing MSFT’s share price history, we can discern three major periods:

1. 1980s to 2000: During this era, the global tech boom propelled Microsoft’s stock to new heights. As personal computers became indispensable in both business and personal realms, the demand for technological innovation surged, fostering the need for hardware and software capable of keeping pace with the growing requirements.
2. 2000 to 2002: Microsoft’s prospects for stock growth dimmed during this period. The company relied on two major cash cows—Windows OS and Office Suite—to generate steady earnings and revenue. However, Microsoft ceded the spotlight in the smartphone, portable music player, and tablet markets to its tech rivals.
3. 2013 to Present: Microsoft entered a recent phase of success. In recent years, the company’s stock has experienced rapid growth, driven by its foray into new avenues like cloud computing and mobile. Additionally, Microsoft has undertaken significant acquisitions (e.g., LinkedIn) and formed strategic partnerships (e.g., Samsung and Lenovo) to facilitate its growth.

Microsoft’s Share Price Today

The escalating trade tensions between Donald Trump and China have cast a shadow over tech stocks. Given that numerous companies maintain significant exposure to China, investors are exercising caution in selecting tech stocks for investment. However, the Microsoft stock price forecast remains largely positive, with MSFT ranking among the top stocks worth purchasing. Once regarded as a “mature” stock primarily sought for stability rather than growth, Microsoft is poised to reclaim its status as a growth stock. Under the leadership of Satya Nadella, who assumed the CEO post in 2014, the company has embarked on a trajectory of renewed growth. Over the past five years, Microsoft’s stock has surged by 231%, largely attributable to the success of its intelligent cloud business solutions. For the fiscal year ending on June 31, 2019, the company reported revenue totaling $126 billion, with contributions from three primary segments:

• More Personal Computing: $46 billion in 2019 (comprising revenue from OS sales, devices, and gaming offerings)
• Intelligent Cloud: $39 billion (encompassing the sale of private, public, and hybrid server products and cloud services)
• Productivity and Business Processes: $41 billion (comprising revenue from Office subscriptions, LinkedIn, and cloud enterprise solutions like CRM and ERP)

Microsoft Share Price Forecast

Historically, Microsoft’s stock price reached a record high of 141.34, which is only 6% higher than its current share price. As of August 23, 2019, the closing price for Microsoft shares stood at 133.39. The latest Microsoft share price prediction, offering a 12-month price forecast, anticipates a growth of up to +14.87% from the latest price. Analysts consistently recommend a “buy” rating for MSFT stock, rendering it an appealing prospect for long-term investment. To make an informed decision regarding the inclusion of Microsoft shares in your investment portfolio, stay abreast of the latest Microsoft news and conduct thorough technical and fundamental analysis.

Get back to Seikum News 🤓