Microsoft. What Drives Microsoft's Stock?

Dear Reader,


Microsoft recently became the world's most valuable company for a short while.

Microsoft's stock did not fall as much as Amazon's and Apple Inc's stocks in the recent stock market correction. Why the remarkable resilience or to put it poetically margin of safety of Microsoft's stock?

I see several reasons. First, Microsoft's past, present and future is still intertwined with the personal computer. Champagne may be forever, but personal computers are not going away either. Second, Microsoft is the second largest cloud computing provider after Amazon. The cloud computing market seems to be exploding and Microsoft is even increasing its market share. Third, clients are embracing Office 365 offerings which are also basically a cloud computing service. The Microsoft Office suite along with Azure are the main drivers of Microsoft's future growth, while the Windows franchise provides the needed safety net.

Satya Nadella turns out to be quite a skillful manager who puts to work his software as a service and infrastructure knowledge to good use. To round it all up, Microsoft's hardware efforts seem to be getting traction as well.

In short, I believe Microsoft's stock is currently about 20% underpriced from its current level of 102.80 USD.

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Conflicts of interest: I may possess some of the securities,currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Kind regards,

Petar Posledovich