Is it an immediate purchase? This is what the MSFT stock chart shows
software giant Microsoft (MSFT) has been hailed for its successful transition from desktop to cloud computing. And MSFT’s stock increased accordingly. But after a recent pullback, many investors may be wondering: Is Microsoft stock a buy right now?
Bill Gates and Paul Allen started Microsoft in 1975 at the dawn of the personal computer era to create PC operating system software. The company’s Windows operating system came to dominate the PC landscape. Microsoft has expanded over the years into productivity software, server software, Internet services, video games, and PC hardware and accessories.
Current chief executive Satya Nadella took the helm of the Redmond, Washington-based company in 2014 and has led Microsoft full steam ahead in cloud computing.
The company’s cloud offerings today include Azure infrastructure services, Office 365 productivity software and Dynamics enterprise software. Microsoft also owns LinkedIn, Skype and GitHub.
MSFT Stock News: Metaverse Progress
Microsoft recently promoted the Metaverse, an immersive version of the next-generation Internet. It currently makes HoloLens mixed reality headsets for remote collaboration.
At Microsoft’s Ignite 2021 online event on November 2, Microsoft showcased its latest innovations for the enterprise metaverse. They include Dynamics 365 Connected Spaces and Mesh for Microsoft Teams. Microsoft stock rose 1.1% after the announcements.
At CES 2022, chipmaker Qualcomm (QCOM) announced a partnership with Microsoft to develop lightweight augmented reality glasses.
On January 18, Microsoft announced an agreement to buy the video game publisher ActivisionBlizzard (ATVI) for $68.7 billion in cash. Microsoft said the Activision purchase will accelerate the growth of its gaming business and provide building blocks for the Metaverse. But Microsoft stock fell 2.4% on the news.
Windows 11 version, acquisition of shades
On October 5, Microsoft launched its Windows 11 personal computer operating system. Windows 11 features an updated design with a new user interface and Start menu. It also provides PC performance improvements and integrates the Teams video conferencing application. Windows 11 is the successor to Windows 10, released in July 2015.
On March 4, Microsoft completed its $19.7 billion acquisition of Nuance Communications, a leader in voice recognition software and conversational artificial intelligence. The acquisition of Nuance, announced in April 2021, will give Microsoft more clout in the healthcare sector.
Microsoft follows Amazon in cloud computing
Microsoft is gaining ground Amazon.co.uk‘s (AMZN) Amazon Web Services in the cloud infrastructure services marketplace.
In the fourth quarter, Amazon Web Services held 33% market share, according to research firm Canalys. Microsoft was in second place with 22% market share.
Other major cloud players include Alphabet (GOOGL) Google Cloud Platform, as well as the Chinese company Ali Baba (BABA) and Tencent (TCEHY). Overall enterprise spending on cloud infrastructure services reached $53.5 billion in the fourth quarter, up 34% year-over-year, Canalys said.
Fundamental Analysis of Microsoft Stocks
Late Jan. 25, Microsoft released a beat and relaunch report for its second fiscal quarter that ended Dec. 31. Microsoft stock jumped 2.9% on the next day’s news.
Microsoft earned $2.48 a share on sales of $51.7 billion in the December quarter. Analysts had expected earnings of $2.32 per share on sales of $50.7 billion, according to FactSet. Year-over-year, Microsoft’s profits increased 22% while sales increased 20%.
For the current quarter, Microsoft expects to generate sales of $48.9 billion, based on the midpoint of its forecast. Wall Street had predicted $48.1 billion in sales for the March quarter. In the prior year period, it had sales of $41.7 billion.
The next catalyst for Microsoft stock could be the company’s fiscal third quarter earnings report. Microsoft plans to announce its March quarter results on April 26.
MSFT Stock Technical Analysis
On Oct. 18, Microsoft stock hit a buy point of 305.94 on a flat basis, according to IBD MarketSmith charts. MSFT stock hit a record high of 349.67 on November 22. But it fell 23% during the recent stock market correction. It ended the April 14 regular session at 279.83.
Microsoft stocks have an average IBD relative strength rating of 60 out of 99. The best growth stocks typically have RS ratings of at least 80. The relative strength rating shows how a stock’s price performance compares to all other actions over the past 52 weeks.
The IBD Stock Checkup tool assigns MSFT stocks an IBD composite rating of 78 out of 99. The IBD composite rating combines five separate proprietary rankings into one easy-to-use number. The best growth stocks have a composite rating of 90 or higher.
Microsoft ranks first out of four stocks in IBD’s Computer Software-Desktop industry group. But the office software group ranks 195th out of 197 industry groups tracked by IBD. Choosing highly rated stocks of leading industry groups in a confirmed uptrend in the stock market generally increases your chances of making profits in growth stocks.
Microsoft stock is on IBD’s rankings list. He is also part of the IBD Long-Term Leaders portfolio.
Additionally, Microsoft ranked first on IBD’s list of ESG stocks for investors focused on environmental, social and governance issues.
Is Microsoft Stock a buy it now?
Microsoft stock is not a buy at this time. However, it could soon be. MSFT stock has consolidated over the past 21 weeks with a buy point of 349.77, according to charts from MarketSmith.
In a negative sign, MSFT stock is trading below its 50-day moving average.
Additionally, Microsoft stock has an IBD accumulation/distribution rating of D. The rating, on an A+ to E scale, measures a stock’s institutional buying and selling over the past 13 weeks. A+ means big institutional buys and E means big sells. The AC rating is average.
Keep an eye on the overall stock market. If the market is heading south, don’t try to fight the general direction of the stock market.
To find the best stocks to buy or watch, check out the IBD Stock Lists. Also check out IBD’s Leaderboard, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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