Breaking News
Investing Pro 0
Black Friday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Microsoft: Is It Time to Back up the Truck?

By MarketBeat.com (Sam Quirke )Stock MarketsNov 24, 2022 02:23AM ET
www.investing.com/analysis/microsoft-is-it-time-to-back-up-the-truck-200632741
Microsoft: Is It Time to Back up the Truck?
By MarketBeat.com (Sam Quirke )   |  Nov 24, 2022 02:23AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
 
MSFT
-0.04%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
US500
-0.03%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BARC
-0.23%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
ATVI
-4.07%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
  • Microsoft has suffered this year, just like other tech stocks.
  • However, signs abound that the worst might be over.
  • Investors have a lot to be excited about in the longer term.

The S&P 500 index is up 15% from last month's lows. This means that investors have a lot to be happy about going into Thanksgiving week, especially given how bleak things have looked at various times in recent months. Some signs of inflation slowing have started to appear (we’re not seeing quite the same risk-off sentiment as we did in October), and thoughts have turned toward which long-term buys look best.

Microsoft Corporation (NASDAQ:MSFT) stays on the list. After bouncing off long-term support earlier this month, Microsoft shares have popped just as much as the broader S&P 500, so investors can breathe a little easier. The worst-case scenario looks less likely to happen for those in the bull camp, but it’s still generally priced into Microsoft shares.

A few weeks ago, Microsoft topped analyst expectations on revenue and earnings in its fiscal Q1 report. Even with that beat and an optimistic outlook from leadership, shares stayed weak and just started to rally in the week afterward.

Long-Term Potential

This kind of price action lends credence to the argument that there’s a bullish re-pricing of the stock currently in progress. CFO Amy Hood has said that she expects the company’s full-year revenue to continue showing "double-digit" growth year-over-year (YOY), even though near-term headwinds remain.

Mostly, these have taken the form of a steady drop in personal computer sales and unfavorable FX conditions. Still, even then, "healthy growth" from the company’s Microsoft Cloud service offerings will likely offset it. The former includes more temporary pain points, while the latter is seen as longer-term strength. As is evident from the recent rally in Microsoft shares and the broader equity market, macroeconomic drivers remain in play.

The red-hot inflation prints and the Fed’s efforts to cool them have damaged stocks in general and tech names in particular. On this day last year, Microsoft shares tagged an all-time high at just under $350. They’re still down 30%, and for those buying into the recovery story, that’s a natural target to aim for.

Recent comments from the sell-side heavyweights lend weight to the long opportunity. Phil Winslow and his team at Credit Suisse have called for an "outperform" rating in recent weeks and positioned the negative impact of the currently elevated optimization cycle as temporary. Barclays (LON:BARC) analyst Raimo Lenschow also reiterated an "outperform" rating, despite what he called "short-term challenges."

Getting Involved

Against this backdrop, we’re seeing investors starting to get involved with Microsoft shares, building momentum. The stock’s MACD has had a bullish crossover and is in positive territory, with the underlying RSI also trending higher. In addition, Microsoft’s planned acquisition of Activision Blizzard Inc (NASDAQ:ATVI) advances all the time.

The company’s portfolio will look more robust than ever with the video game maker and cement its position in one of the hottest markets. For context, the video game industry should hit revenues of over $200 billion by 2025. Activision’s ever-popular "Call of Duty" series will be a welcome revenue stream to Microsoft’s balance sheet.

Investors should be mindful that we’re still in a tightening cycle in the near term — the Fed could give us another nasty surprise. If we can get a few more CPI readings that point to cooling inflation, the market’s mindset will quickly turn from being on the defensive toward the offensive. In that context, it’s unlikely that tech behemoths like Microsoft won’t trade at 30% discounts from all-time highs for very long.

Original Post

Microsoft: Is It Time to Back up the Truck?
 

Related Articles

Tim Knight
One Turkey Ago By Tim Knight - Nov 24, 2022 1

Let’s consider what the world was like last November, which I’ve put in the captions. Keep in mind, these descriptions are all about what USED to be, a year ago. Meta Platforms...

Microsoft: Is It Time to Back up the Truck?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email