Microsoft Stock ( NASDAQ:MSFT )
While I prefer Microsoft ( NASDAQ:MSFT ) to those of other large tech companies such as Google ( NASDAQ:GOOGL ) and Apple ( NASDAQ:AAPL ), I believe large-cap tech stocks will not outperform in the next few years as they have in the past.
Investment Thesis
Microsoft is a high-margin cash cow that, together with Azure and other important business sectors, essentially operates an online toll booth. They are still growing domestically, but they are also investing internationally, with recent examples being Open AI and Activision. At 26.7 times earnings, I think that Microsoft’s valuation is a bit high. For the time being, I believe it is a hold, but if we reach close to 20x earnings, I will reconsider.
The Company has continued to buy back a lot of shares despite the high valuation. The dividend, which currently yields 1.1%, has been growing for several years. With a market cap close to $2 trillion, I wonder how Microsoft stock will outperform in the future simply owing to the company’s large size.
Activision & ChatGPT
I looked at the most recent 10-Q , and I haven’t found anything that would be of interest to investors who are already familiar with the company. Revenues rose marginally, while net margins fell significantly. Microsoft is still a high-margin cash cow, but the most intriguing recent Microsoft move is its investment in OpenAI.
GPT tool follows layoffs. Microsoft plans to cut 10,000 jobs, continuing the trend of layoffs in the tech sector in recent months. They intend to incorporate the Chat GPT tool into Bing and other Office products, but I’m interested...
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