It’s the startups that are getting all the attention in the tech world these days. Companies like Microsoft Corporation (NASDAQ:MSFT) don’t always get the attention they deserve. Still, MSFT stock climbed an impressive 33.6% in the past 12 months.
Here are three catalysts that could keep the upward trend going in Microsoft stock.
Every tech giant is working on its vision of the next big thing. For Microsoft, the virtual reality and augmented reality marketplace could represent the next big opportunity.
Back in January 2015, Microsoft unveiled its augmented reality (AR) headset, “HoloLens.” The device projects a virtual world on top of the real world through a pair of holographic lenses. After putting on the headset, users can create and shape holograms with gestures.
The good news is that Microsoft is moving along quite well on the project. The first wave of HoloLens development kits are shipping out to developers this week. We have already seen how amazing the technology is. With more developers onboard, HoloLens could be a huge hit when it becomes available to consumers.
In case you haven’t noticed, today’s Microsoft is much more than a PC-based company. Under CEO Satya Nadella’s leadership, Microsoft has expanded its presence in the cloud business.
Nadella used to be executive vice president of Microsoft’s Cloud and Enterprise group, one of the company’s fastest-growing and most profitable segments. After taking the helm as CEO, Nadella has been pursuing a “mobile first, cloud first” strategy.
Cloud services are mostly aimed at businesses. Through its “Windows” operating systems and “Office” productivity software, Microsoft has built strong relationships with enterprise IT departments. These relationships could help Microsoft move into the cloud business.
The company’s efforts are already producing results. The highlight has been Microsoft “Azure,” the company’s enterprise-grade cloud computing platform. In the fourth quarter of 2015, Azure revenue surged 140% year-over-year on a constant currency basis. Revenue from Azure premium services nearly tripled year-over-year. Also, more than one-third of Fortune 500 companies have chosen Microsoft’s “Enterprise Mobility” solutions. (Source: “Earnings Release FY16 Q2,” Microsoft Corporation, January 28, 2016.)
Returning Value to Shareholders
Last but certainly not the least is Microsoft’s solid track record when it comes to returning value to shareholders. Today, there are many tech giants running profitable operations. But when it comes to dividends and buybacks, few can match Microsoft.
Microsoft has been paying dividends for more than a decade. Moreover, its dividends have only been increasing. From its first quarterly dividend of $0.08 to today’s $0.36, Microsoft’s quarterly dividend has been growing at a compound annual growth rate of 14.65%. (Source: “Dividends and Stock History,” Microsoft Corporation, last accessed March 29, 2016.)
The company is also a heavyweight buyback player. In the trailing 12 months, Microsoft repurchased $16.8 billion worth of its own shares. The only company that spent more than Microsoft in buybacks was Apple Inc. (NASDAQ:AAPL). (Source: “Buyback Quarterly,” FactSet, March 17, 2016.)
The Bottom Line on MSFT Stock
And let’s not forget the company’s biggest achievement—the Windows operating system. You can hate its bugs all you want, but you can’t deny that Windows was crucial in bringing personal computers to the mass market. Today, its latest version is installed on over 200 million monthly active devices. (Source: “Windows 10 Now Active on Over 200 Million Devices,” Windows Blog, January 4, 2016.)
The best part is that the company is just getting started on its next journey. The upside potential could be huge for MSFT stock.