MSFT Stock Outlook
At present, Microsoft Corporation (NASDAQ:MSFT) is looking better than many younger and flashier companies. MSFT stock was up 29.5% in the last 12 months despite significant turbulence in the market. It feels more like a growth stock than a blue chip.
So what’s the secret? What has Microsoft stock on this mad tear? The answer is shockingly simple—it all comes back to “Windows.” That may seem a little vague at first, but I’m pretty sure you’ll be on the MSFT bandwagon by the end of this article.
I’m also confident we’re going to look back on the Satya Nadella-for-Steve Ballmer switch as one of the greatest moments in Microsoft history. That little CEO shuffle is the one reason to be bullish on MSFT stock. (Source: “How Microsoft CEO Satya Nadella did what Steve Ballmer and Bill Gates couldn’t,” Business Insider, January 30, 2016.)
Nadella shattered internal barriers that dogged Microsoft for years.
The company was notorious for its domestic strife. The never-ending turf wars had made it impossible to build a satisfactory product, which is partly why the “Lumia” smartphones were an utter failure.
They couldn’t figure out a value proposition that was tempting to “iPhone” or “Android” users. At the time it was conceivable that Microsoft could inherit BlackBerry’s position as the “secure smartphone” provider, but they never made that strategy work.
The Nokia deal was simply a fiasco of staggering proportions and it happened on Ballmer’s watch. Oh, and remember “Windows 8?” I’ll never forget that particular train wreck. It was the most unwieldy software I’ve ever used.
But then Nadella took over and things began to turn around. “Windows 10” was a gigantic improvement from its predecessor. He unified the company around a single vision and it’s paying enormous dividends. Microsoft is going mobile in a very big way.
Unlike Apple Inc., which has standalone operating systems for its smartphone and laptops, Microsoft is trying to bridge all divides. The new Windows 10 is supposed to be fluid across all devices, whether mobile or otherwise.
That makes it really simple for app developers. If you build just one app for Windows, you’ll have done your job. But Nadella knew that this strategy needed something more solid to anchor the company’s market share.
PC sales were slowing as consumers bought more tablets and smartphones. Microsoft needed to score a major win, so the company released the “Surface,” a line of laptop/tablet hybrids.
There’s no way it would exist if Nadella hadn’t broken down the silos within Microsoft.
In the last quarter, the Surface provided a ray of sunlight for Microsoft. The devices sold 29% more units than a year before, bumping revenues up to $23.8 billion.
It’s not a coincidence that MSFT stock rose by 50% during Nadella’s tenure. He’s proven himself a visionary leader and a competent manager, so I put my faith in him. And that was just his warm-up act—there’s plenty of room left on the upside for MSFT stock.