New CEO Helps Microsoft’s Share Price Boom

Microsoft Corporation’s [NASDAQ:MSFT] share price just hit a new all-time high.

It’s sitting at over 100,000% of its original share price back when it first entered the stock market.

It’s easy to see why. Over the last four years, new CEO Satya Nadella has propelled Microsoft to ever dizzying heights, tripling its share price and finally surpassing its dotcom bubble peak.

The share price last closed at $98.03, with only a slight dip in the early hours of this morning.

How is Microsoft staying ahead of the game?

This is a great year for Microsoft, as it enjoys its most profitable and valuable era throughout its entire 43-year history.

Nadella is carving a unique path for Microsoft, by choosing to collaborate instead of compete. Microsoft apps, like Word and Outlook, are now favourites on Apple’s smartphones and tablets. And on Monday, the tech titan held its annual conference in Seattle, where Nadella pressed the importance of artificial intelligence (AI) to Microsoft’s future.

As reported by The Sydney Morning Herald:

We have to go from AI being in the hands of a few companies to AI being everywhere,’ Nadella commented. ‘That’s the real shift.’

Along with Microsoft’s hybrid cloud platform, Azure, creating huge gains in the market, Nadella’s noble vision could explain why Microsoft has experienced such epic growth.

In the past, Nadella has defined Microsoft’s mission as to ‘empower every person and every organisation on the planet.’ Tech media commentators have seen this as a divergence from other tech companies’ fickle tendency to chase trends and public excitement.

What’s next for Microsoft?

In Nadella’s first quarter alone, Microsoft’s revenues were US$20.5 billion and its profits were US$5.7 billion. Four years later, that has grown to US$26.8 billion and US$7.4 billion. The stock has jumped near 12% year-to-date (YTD), and it’s been predicted to keep going up.

At the conference, a US$25 million grant for researching how AI could help disabled people was announced.

Also, a recent announcement saw videogaming become an integral aspect to the tech giant’s ‘Intelligent Cloud’ business, opening up opportunities for Virtual Reality (VR) and increased profit margins. Microsoft Xbox currently has around 59 million users.

Analysts have predicted that boosting the value of the ‘more personal computing’ division, could herald a ‘re-rating’ of the division. If that happens, it would add $100 billion to Microsoft’s market capitalisation, an increase of 14%.

On top of all this buzz, veteran media analyst Porter Bibb has made the bold prediction that Microsoft will acquire Netflix.

Microsoft is still not a cheap stock. For those interested, it could pay to wait for the hype to drop. But analysts seem to agree that big things are ahead for the tech giant. They’ve maintained return on investment for the last twelve months at 15.04%.

Can we blame anyone for not wanting to miss out?


Ryan Dinse,
For Money Morning

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Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

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