Analysts believe it is possible that the market value, currently $804.2 billion, will reach $1 trillion. Microsoft focuses more in the cloud than Google. Recently, sales in this business increased by more than 90 %. The cloud-based office software package Office 365 increased by 41%. However, Amazon (NASDAQ:AMZN) is the leading company in the Cloud market.
All-rounder Enterprise-Suite Microsoft 365
All-rounder office software Enterprise-Suite Microsoft 365 has software solutions for everything that companies need. The giant attracts companies with inexpensive licenses for the Office package (Word, Excel, PowerPoint, OneDrive, Teams…). Once companies have purchased the license, employees become more and more acquainted with the various applications for the different business activities. Microsoft charges a monthly fee. Cash flows month after month into Microsoft accounts. It’s a subscription model. The new Microsoft 365 Enterprise Suite, which CEO Satya Nadella has launched, has been well received.
The more employees get used to the software, the more they will depend on it. Employees automatically gain access to all applications. It is a comprehensive collaboration tool for exchanging opinions and data within the company. Workstations are equipped with headsets. Employees can reach each other via Skype by simply double-clicking on it. Skype also makes it possible to make calls to the outside world. A telephone system is no longer necessary. All you need is an Internet connection. Companies not only save money, but also become more efficient and team-oriented. The software package includes an IT security package. This allows files to be encrypted. It can be controlled from which computers the files may be opened.
Artificial Intelligence
Microsoft Artificial intelligence is not only a leader in the office suite, but also in other futuristic fields. With an ever-increasing volume of data, CEO Nadella can take over more artificial intelligence (AI) business. He wants to expand AI massively. Nadella has asked Research Director Harry Shum to set up a group to look at artificial intelligence and its social benefits, called the “AI and Ethics and Research Committee”. This shows that it’s all about speed. At the end of June, the giant bought the Californian Company Bonsai AI. This object of desire works with industries to build automatic systems. The purchase price was not disclosed.
4 years ago, the Indian Nadella took over from his predecessor Steve Ballmer. Microsoft is “a unique platform”, said the 50-year-old in an interview with the stock exchange station CNBC. In addition, Microsoft must constantly renew itself. Nothing can stay the way it is. It is also important to give employees a sense of identity in an ever-changing world. Of course, it is important that the culture remains the same. “We must change as the world changes. We are in the middle of a change,” said the CEO. “We have more computer power in a car today than we had in a data center years ago.” Each factory will have millions of sensors. Cameras would control the factories. Thanks to the software and AI, one is able to perceive objects.
More and more data would be created. “Now AI must be used to automate processes.” Microsoft scales because of the size. “We have 50 data center regions; we have more than the competition.” Every company becomes an AI company. It starts with speech recognition. Employees should be able to become AI developers. There would be enormous opportunities there. AI should be of benefit to people. At the heart of the learning computer, the company director said.
Smart Supermarket without cash registers
The tech giants are attacking each other. Amazon has opened an automated supermarket without cash registers in Seattle. More branches are to be added in San Francisco and Chicago. Nevertheless, Amazon is not the only player in the market. Microsoft has developed an automated loading technology. This was reported by the Reuters news agency. Allegedly, Walmart (NYSE:WMT) and other international dealers are interested in it. The details of Microsoft technology are not known.
Amazon uses customers’ smartphones when they enter the store. The smartphones need to be scanned. Then sensors detect the goods being purchased. The total amount of the goods will be debited from the credit card as soon as the customer leaves the shop.
GitHub Deal
Microsoft GitHub deal is becoming more sophisticated. Titan, for example, purchased the GitHub programming platform for $7.5 billion. The acquisition operates a software development platform. It is a collaboration tool. Open source software is a fast-growing market. GitHub is a Facebook-kind for developers. The purchase price seems sumptuous compared to the mere $200 million in sales. However, what is so valuable are the 28 million software professionals who share their codes there globally.
Nadella’s building platforms: He expands the LinkedIn (NYSE:LNKD) career site, which already has 562 million registered members. He’s leading the data cloud. GitHub should remain independent, it promises. The promise is not intended to discourage the designers on the platform from the new owner. OpenSource has become the standard. There, everyone can share their ideas and rely on others’ work. It is an extremely helpful tool for making progress. It uses the brightest minds in the world freely.
Microsoft is flying high
Current exchange rate $104.27. Whoever bought the stock three years ago rushed into a profit of 121%. By comparison, the S&P 500 index rose by only 30% over the same period.
Together with Google, Microsoft dominates the tech scene. Microsoft is hoarding $132 billion in cash. This is countered by around $88 billion of debt. The end result is that, the group swims in money. Moreover, it is on the rise. Free cash flow generates $33 billion on a 12-month basis. The cloud business generates the greatest returns on investment. That’s why CEO’ gets down to brass tacks. They’re way ahead of their own plans. Amazon dominates 33 % of the market in the cloud segment. Microsoft as N°2 has secured 13%. The P/E of the Software-Dino makes a good 28. Quarterly sales last grew by 15.5 %.
PaaS – A success model
Software rental scheme is more steady. A race has broken out, who will be the first to reach the 1 trillion market value between Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL) and Amazon. Apple (currently valued at $911 billion) is likely to make it. When Nadella took over from Steve Ballmer in 2014, he opted for the subscription model. The popular office software Microsoft Office was available for rent and no longer for a one-time payment. This increases the continuity of sales. The company’s ability to plan was made easier by the steady monthly income.
In the 2nd quarter, sales grew by 12.5 %. Microsoft Office now has 29.2 million consumers with subscriptions. Sales in this segment rose by 41 %. The entire cloud market will double in a few years. It’s like the gold rush. The amount of cloud storage needed has increased more than ever before. Worldwide, data collection and evaluation is increasing. Companies are looking out to satisfy their customers. They need to know when machines will break down so that they can act accordingly. This requires to run extensive analyses on the cloud. As the world’s N°2 in this huge market, Microsoft is thriving. The dividend yield amounts to 1.6 %. Among the leading tech stocks, such a high dividend yield is rare. According to fund management instructors from vestq.com, the P/E ratio is acceptable at around 28. The portfolio is substantial. Microsoft does not have a mega product at all. It has Skype, Office 365, Windows, Bing, Xbox, Outlook LinkedIn etc. The profitability is high, the prospects are good. In the most recent quarter, a surplus of USD 7.4 billion was maintained. Net return on sales was a staggering 28%. Quarterly sales of USD 26.8 billion are enormous in themselves.
Financials
Technical Analysis
In addition to the fundamental perspective the technical situation of Microsoft looks positive as well. A strong uptrend is established and new all time highs can be reached soon. The next strong resistance is positioned at approx. $130 that can be also defined as a possible target point. The next support level lies approx. $90.