Microsoft’s rise in the 1990s was spectacular, where their stock grew almost 100 times. It then had to spend 14 years stuck in a rut, but since 2014, it’s been on a roll again.
Whenever we speak of stocks that have come a long way since they hit the stock market, Microsoft most definitely stands out from the crowd. With Microsoft, it’s not just how much its stock has grown over a year or two, as we’re talking a 35 year move that is still showing no sign of stopping.
If you bought some shares of Microsoft back when it opened in 1984, and held it all these years, your investment would have returned almost 4000%. That would be impressive enough for 35 years, but this isn’t the total return, it’s the average annual one, and the stock has actually risen 138,000% in total over this time.
This means that an investment of $1,000 back in 1984 would be worth $13.8 million today, a truly mind-boggling rate of return. This is what you call long-term growth, of a truly epic proportion.
The decade of the 1990’s was a particularly nice one for Microsoft. Their first 6 years saw them only grow the stock by about 6 times, although by the time the 1990s ended, their stock was worth almost 600 times more than where it started.
Most of this move happened in the last two years of the 90s, when tech stocks in general were exploding and the king of tech stocks was no exception.
We all know what happened then, and while the year 2K concerns that many had at the time were overblown, they sure weren’t when it came to tech stocks, and the bottom just fell out of Microsoft and many other similar stocks. 2000 saw Microsoft fall by about two thirds, wiping out all of the gains they enjoyed during last year and a half of the previous decade.
Microsoft rose from the ground and dusted itself off after such a miserable year, but this crash ended up taking a lot of the luster off of the stock and the glory days seemed well past them. The stock ended up trading in a range for the next 14 years and we never even got close to the heights that they set to close out the 20th century.
Things started to change with the stock about 6 years ago, and while their rise up again started off rather slowly, it at least was moving more consistently in the right direction. By mid 2016, this move started to really pick up, as they finally passed the all-time high set in 1999. In new all-time territory, the demons of the crash in 2000 were finally exercised and they were finally on the move again.
Microsoft has simply been stellar since then, and this continues into 2019. They did take a hit in the fourth quarter of last year as most stocks did, but the damage to them was actually less than the market average, which is very notable considering that Microsoft goes up faster than the market so it should be prone to go down faster as well, and this is almost always the case with big tech stocks like this.
Since last Christmas, Microsoft is up a very impressive 46%, about twice the market average. During the current year, while it’s had its pullbacks, particularly the one that hit many stocks in May, it’s been moving forward very nicely and just keeps putting in more all-time highs.
Microsoft’s Excellent Quarterly Report Bodes Well for More Success
Microsoft just released its quarterly earnings, and based upon the results, they look poised to continue their climb. Both earnings and revenue surpassed expectations. The consensus for earnings was $1.21 per share, and they reported $1.37. This tells us that the company is doing even better than we expected, and earnings are what matters the most as far as business results go because this represents a company’s profit.
Revenue in the quarter also exceeded expectations, coming in at $33.72 billion versus the estimate of 32.77 billion. Microsoft is both taking in more money as well as profit over what the street thought.
Analysts were already pretty bullish about this stock even before this report, and these results have only added to their optimism about it. When we look ahead to what may be in store in the near future, which comprises a large part of a stock’s overall outlook, things look pretty great as well.
When we see an earnings report, it’s not even about what happened last quarter as this is all in the past. What matters is the road ahead, and good earnings reports suggest that companies know what they are doing and are on the right track for more success.
Price targets for Microsoft range from $155 to $160, which means that analysts are seeing a good amount of upside from here, with the stock closing the week at $138.08. Getting to $160 would make the stock worth 16% more than it is today, which is a nice return even for a stock that can move as much as Microsoft.
We should always preface such remarks with something such as “all other things being equal,” as if the market doesn’t co-operate, this can quickly dash any such ideas. This analysis really boils down to degrees of outlook, and the one for Microsoft is positive across the board.
If you don’t like Microsoft here, it’s hard to imagine what you would like, and just because we continue to break new ground with new all-time highs over the last few months isn’t any reason to shy away. On the contrary, this is a situation that bears liking a lot, because there are fewer limitations than with a stock looking to work its way back to where it was at one time and our wondering if such an area will become an obstacle once again, which it often does.
Microsoft does look good here on all timeframes, whether you’re looking to just ride the current move for a while and then jump off, whether you just want to trade it day by day or even intraday, as many traders like to do, or whether you want to stick around for the longer-term and look to capture the value that Microsoft tends to create throughout the years by further leveraging their commanding positions in their markets.
The Cloud is the Future, and Microsoft is Leading the Charge
Microsoft is also becoming micro-cloud lately. Many people are excited about the growth of its cloud-based services, where clients can use their servers as hosts and have information delivered to them on demand via the internet. The internet used to be a way that the computers of users can communicate with one another, but this has really expanded to utilizing big off-site servers such as those provided by Microsoft, which can be a more cost-effective solution.
Microsoft has far from a monopoly with this one, but this is a company with tremendous resources and the future with their cloud is one that people are even raving about. They are still, of course, the king of the operating systems, at least as far as desktops go, and they have simply dominated this market from the first time Windows was released as an alternative to DOS back in 1983 until today.
They recently got passed by Android as the world’s most popular operating system though. They really haven’t been able to make a go of the world of mobile computing yet, but in spite of how popular smart phones have been, desktops aren’t going anywhere and there’s no reason why Microsoft won’t continue to dominate them.
Office and Azure have now passed Windows as the kings of the company, and with the tremendous growth of cloud computing that we’ve seen and will continue to see, this has a lot of people excited and feeling pretty bullish.
Microsoft looks well poised to continue their mega success well into the future. The present looks pretty good as well.