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3 Reasons Why Microsoft Stock Is A Strong Buy

Dec. 03, 2018 7:30 AM ETMicrosoft Corporation (MSFT)25 Comments
Logan Kane profile picture
Logan Kane


  • Despite lacking the hype and drama of FANG stocks, Microsoft is putting up surprisingly good revenue and EPS growth numbers.
  • Cloud and gaming dominance and recent relative strength mean Microsoft shares are worth a look.
  • Consider picking up shares in Microsoft ahead of the New Year.

Should I buy Microsoft stock?Microsoft (NASDAQ:MSFT) never gets the attention that FANG stocks get but has been putting up shockingly good EPS numbers lately. With MSFT briefly eclipsing Apple (AAPL) as the world's most valuable company, Microsoft's success isn't likely to be ignored going forward. Both companies are good buys, but since Microsoft doesn't get as much attention as Apple, I'd like to highlight three reasons why MSFT is also an attractive buy.

1. Cloud and gaming dominance

One of the reasons that Microsoft languished during the 2000s was the inability of the company to grow as fast as the market had priced during the tech bubble. Microsoft earned billions and billions of dollars from 2000 to 2009 and the multiple fell and fell. MSFT dramatically underperformed the market during this time.


In 2010, Microsoft got into the cloud computing business with the launch of Microsoft Azure (then called Windows Azure).


Even after the cloud business launched, Microsoft continued to struggle with the perception that they couldn't innovate. As the business grew and grew, the numbers became too big to ignore. By 2016, Microsoft caught up with the broader index and has gone pretty much straight up since.

Microsoft is growing faster than Amazon is in the cloud space, and rightfully so. CEO Satya Nadella on their value proposition during the last quarterly CC:

No customer wants to be dependent on a provider that sells them technology on one end and competes with them on the other. Getting this equation right is key to their success going forward. Microsoft is uniquely positioned to help.

This is a tough point to argue against for advocates of Amazon AWS. As long as Amazon competes against its customers worldwide in a variety of industries, Microsoft will have an edge in the enterprise cloud business. Don't buy into the Amazon competition

This article was written by

Logan Kane profile picture
Author and entrepreneur. My articles typically cover macroeconomic trends, portfolio strategy, value investing, and behavioral finance. I like to profit from the biases and constraints of other investors. Paywalled articles are available along with 1,000+ other authors by subscribing to Seeking Alpha Premium.You can read some more of my work for free here on my Substack.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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