Should I Invest in Microsoft Stock?

Roberto Rivero

With the phenomenal success of many technology stocks in recent years, many new investors dream of finding the next Tesla or Amazon. But this kind of thinking means that many older, well-established companies are often overlooked.

In this article, we will take a look at the prospect of investing in Microsoft, a member of the technology old guard. We will look at the tech company’s recent performance, the evolution in share price, examine the question ‘should I invest in Microsoft stock’ and demonstrate how to buy Microsoft shares.

A Brief History of Microsoft

Although overshadowed over by Apple in recent years, Microsoft undoubtedly remains one of the most successful technology companies of all time. Before we answer the question ‘should I invest in Microsoft stock’ or demonstrate how to buy Microsoft shares, let’s take a look at some of the highlights from the company’s history.

  • 1975: Microsoft Corporation founded by Bill Gates and Paul Allen
  • 1985: First version of Microsoft Windows is released
  • 1986: Initial Public Offering (IPO) on the Nasdaq Exchange
  • 1990: Microsoft Office released
  • 2000: Bill Gates steps down as CEO
  • 2001: The first Xbox video game console is released
  • 2008: Microsoft launches Azure Services, its foray into cloud computing services

Microsoft Results

As part of the technology old guard, Microsoft has already experienced its period of high growth and established itself as a market leader as well as one of the biggest companies in the world.

However, Microsoft continues to record impressive financial performances. In the table below, we have highlighted some of the key indicators from Microsoft’s financial results for the year ended 30 June 2023.

Microsoft Financial Results 2022
  2023 2022 YoY % Change
Product Revenue $64,699m $72,732m -11.04%
Service and Other Revenue $147,216m $125,538m 17.27%
Total Revenue $211,915m $198,270m 6.88%
Operating Income $88,523m $83,383m 6.16%
Earnings per Share (EPS) $9.72 $9.70 0.20%

Source: Microsoft – Earnings Release – Full-Year Ended 30 June 2023. 

Although Product Revenue dropped year on year, Service and Other Revenue soared, providing a lift in total revenue and operating income.

Amongst other products, Service and Other Revenue includes both Office 365 and Microsoft Azure, Microsoft’s cloud computing arm. Both of these products have been important revenue drivers for Microsoft in recent years, with its cloud offerings being a key source of growth.

So what about the Microsoft shares themselves? In the next section, we will take a look at the recent evolution of the Microsoft share price.

Microsoft Share Price Analysis

Microsoft has had an incredible history on the stock market since its debut back in 1986, reportedly creating thousands of millionaires amongst employees who wisely accepted stock options as part of their compensation in the company’s early days.

But how has Microsoft stock performed in recent years? Before we take a look at how to buy Microsoft shares, let’s analyse the company’s recent stock market performance.

After following a long-term upward trend, in April 2019, Microsoft became the third US company ever to reach a market cap of $1 trillion. Despite a brief setback at the outset of the coronavirus pandemic, Microsoft recovered and became one of many tech stocks that ended up excelling over the following two years. The release of the new Xbox in November 2020 allowed Microsoft to capitalise even further on the social restrictions in place at the time.

In June 2021, Microsoft announced that Windows 11 would be released later in the year. The same day, Microsoft’s market cap closed the session in excess of $2 trillion for the first time in the company’s history.

Like many other stocks in 2022, Microsoft did not fare well, with share price falling 29% by the end of the year. However, the first six months of 2023 saw Microsoft completely reverse this loss, gaining 42% and closing at an all-time high in July.

How much would you have if you bought Microsoft stock in 1986?
A $1,000 investment in Microsoft stock in 1986 at the IPO price of $21 per share would have bought you 47 shares. Adjusting for subsequent Microsoft stock splits, as of 2 August 2023, you would have owned 13,536 shares, a position worth more than $4,433,000!

Will Microsoft’s strong performance this year continue? In the following section we will look at the question of ‘should I invest in Microsoft stock?”

Invest in Microsoft with Admirals

With an Invest.MT5 account from Admirals, you can buy shares of Microsoft as well as shares from more than 4,500 stocks and over 200 Exchange-Traded Funds (ETFs) from 15 of the world’s largest stock exchanges! Click the banner below in order to open an account today:

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Should I Invest in Microsoft Stock?

Under the tenure of CEO Satya Nadella, Microsoft has embraced the future and shifted focus towards cloud-based products. Gone are the days of paying a one-off fee for Microsoft Office, now consumers must pay an annual subscription for Office 365. In terms of market share, Microsoft’s cloud computing service, Azure, is second only to Amazon Web Services in this rapidly growing field.

Both these services have undoubtedly benefitted from the increase of remote working since the outbreak of the Covid-19 pandemic. Whilst, in 2022, many employees returned to the office, many others either have not or have only done so on a part-time basis, and it looks like remote working is here to stay.

Consequently, many businesses have become reliant on these core, subscription based, Microsoft services, which have continued to provide Microsoft with a reliable stream of revenue despite an uncertain economic environment.

These enterprises generate a shedload of cash and, consequently, unlike many younger tech companies Microsoft pays a reliable quarterly dividend which is currently $0.68 per share. At the current Microsoft share price, that represents an annual dividend yield of around 0.8%. This may not seem like a lot but it is a reliable source of income, and one which is consistently growing, having more than doubled since 2015.

Much of Microsoft share price gains in 2023 have come from a bullish sentiment surrounding the future of Artificial Intelligence (AI). Microsoft is the largest investor in OpenAI, the company which developed ChatGPT.

This seemingly wise investment has placed Microsoft in a position to benefit from potential future growth in the AI industry, and has given it a significant head start over its rivals. Nevertheless, many of these rivals have stepped up their respective efforts in this industry, leading to an increase in competition.

Furthermore, whilst the global economy has proved more resilient in 2023 than many had anticipated, high inflation and rising interest rates could lead to an economic downturn. Therefore, anybody choosing to invest in Microsoft should be braced for short-term volatility in share price.

How to Buy Microsoft Shares

If you are now wondering how you can get in on the action and invest in Microsoft, you may be interested to know that you can do so with Admirals! In order to learn how to buy Microsoft shares, follow these 4 steps:

  • Open an Invest.MT5 account to access the Dashboard
  • Click Invest next to your account in order to open the MetaTrader WebTrader
  • Search for Microsoft stock on the right-hand side of the screen
  • Click ‘Create New Order’ at the bottom of the screen, enter the number of Microsoft shares you wish to purchase and click ‘Buy’ to send your order to the market.
Depicted: Admirals MetaTrader WebTrader - Microsoft Corp. H1 Chart. Date Captured: 2 August 2023. Past performance is not a reliable indicator of future results.

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Investing in Microsoft FAQ

When Did Microsoft Go Public?

Microsoft went public on the 13 March 1986 via an initial public offering at a price of $21 per share.

What Is the Stock Symbol for Microsoft Corporation?

The Microsoft stock symbol is MSFT.

When Did Microsoft Stock Split?

At the time of writing, Microsoft has split its stock on nine occasions, the most recent of which was a 2:1 split on 18 February 2003.

How to Buy Microsoft Shares in UK?

In order to buy Microsoft shares in the UK, you must register with a broker which offers access to the US stock markets. With Admirals, you can invest in Microsoft and more than 3,300 other US stocks.

INFORMATION ABOUT ANALYTICAL MATERIALS: 

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following: 

  • This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  • Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  • With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  • The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  • Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
  • Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
  • Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand therisks involved.
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