Microsoft Corporation
01.17.2025
Microsoft Corp Overview
Microsoft Corporation (Nasdaq; ticker: MSFT) was established in 1975 by Bill Gates and Paul Allen and is now the third largest company in the world according to market capitalisation (US$3.09 trillion).
With offices in over 100 countries, Microsoft is a global technology leader known for developing and marketing software, hardware, and cloud services. Its flagship products include the Windows operating system, Microsoft Office suite, and Azure cloud platform. The company also manufactures hardware, such as Surface devices and Xbox gaming consoles.
Microsoft has also broadened its focus to include Artificial Intelligence (AI), enterprise solutions, and business software, reinforcing its status as an industry leader in innovation and digital transformation. AI, cybersecurity, and cloud technology advancements continue to shape its success and are expected to have a marked impact across multiple industries in the future.
Why Trade Microsoft (MSFT) Shares?
In the three months ending 30 September 2024, Microsoft reported US$65.6 billion in revenue, up from US$56.5 billion in the previous year (a 16% year-on-year gain [YY]), with net income also up 11% YY to US$24.7 billion from US$22.3 billion.
Microsoft’s ongoing investments in AI are a key focus for investors as it expands its infrastructure and ramps up spending on chips to manage more demanding workloads. Furthermore, the company is a primary investor in OpenAI – the creator of ChatGPT – currently valued at US$157 billion. This partnership allows Microsoft to improve and expand its products, as well as strengthen its position as an industry leader. The MSFT Stock has been entrenched in an uptrend since 2016, with only one meaningful correction developing in 2022. Motivated by developments in AI, the Stock rallied 74% between 2023 and 2024 and reached an all-time high of US$468.35. Ultimately, this remains a company that investors will monitor closely.
What Influences the Price of MSFT?
A company’s earnings report can be a significant driver of volatility. It is a widely watched release that delivers a snapshot of a company's performance over a specific period – usually a quarter. This new information underscores key metrics for companies like Microsoft, including revenue, income, and forward guidance, which can either boost demand for the Stock or trigger a selloff. Increased volatility often occurs when an earnings report ‘surprises’ the market: a release diverges from what analysts had forecasted (usually a median estimate).
Economic growth can significantly impact productivity, which, in turn, can influence other macroeconomic statistics, broader Stock indices and individual Stocks, such as Microsoft.
An economy performing well – this can include stable inflation, moderate real GDP growth (Gross Domestic Product), low unemployment, and an acceptable current account (low deficit) – can give investors more confidence in the market. Additionally, and most perceptibly, an outperforming economy generally means consumers spend and invest more. This tends to be more evident if average wages increase; consumers are more likely to purchase big-ticket items like houses, cars, and computers.
However, the opposite effect can occur in an underperforming economy: investors may lose confidence in the market and become less willing to invest. You will also likely see consumers reduce spending on big-ticket items, especially if wage growth stagnates.
Broader trends within the tech industry can affect Microsoft’s Share price. As a key player in the sector, the company is impacted by shifts such as the growing adoption of enterprise software and cybersecurity developments for advanced technology. Positive sentiment across the tech industry, particularly regarding digital transformation or hardware innovation, tends to be positive for the MSFT Stock.
Success in the cloud and AI markets is one of the major drivers of revenue and performance for Microsoft. Its cloud platform, Azure, holds the second-largest global market share after Amazon Web Services, and its continued growth is expected to impact investor sentiment.
Microsoft has incorporated AI applications to create new revenue streams and enhance its competitive edge. Recent examples include Copilot for Microsoft 365 (launched in late 2023) and GitHub Copilot (initially released at the end of 2021). Going forward, investors will pay close attention to AI developments and new product launches, anticipating that these advancements will bolster further buying.