Bill Gates is perhaps one of the most well-known businesspeople to have ever walked planet earth. The Microsoft (NASDAQ:MSFT) co-founder has consistently been the most wealthy person in the world for most of the past two decades, though his net worth has recently lagged behind other CEOs who have held their stock and watched their valuations climb higher.
Microsoft stock remains Bill Gates’ most prominent holding, though the former CEO of the software and cloud giant has diversified his portfolio into other growth stocks of late. Via his Bill & Melinda Gates Foundation as well as Cascade Investment, he has built a notable portfolio of a range of stocks I’ve covered in the past.
But given that most of Bill Gates’ current net worth can be derived from his Microsoft holdings, I think it’s a good idea to dive into this stock. We can ponder all we want about how wealthy Gates would have been if he just let it all ride, but his push for diversification is one that I don’t think should be trifled with. Let’s focus on Microsoft, and where this stock could be headed from here.
Key Points About This Article:
- Microsoft is the largest company in the world by market capitalization, making Bill Gates (the company’s co-founder) a very wealthy man.
- Let’s dive into the outlook for Microsoft over the long-term, and where this stock could be headed from here.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Microsoft Is Betting Heavily on AI
Microsoft continues to invest heavily in the AI revolution, and appears to be among the companies looking to build a fortress moat around this particular business. Aside from the company’s cash cow business lines of software and cloud services, there are a range of other higher-growth opportunities the company has pursued in recent years, including its multi-billion-dollar deal to acquire a large ownership stake in AI leader OpenAI.
Among the more recent pieces of news in the world of big AI investments is Microsoft’s recently-announced €4.3 billion ($4.75 billion) investment to expand its cloud and AI data centers in Italy over the next two years. This move will be the largest initiative in the country, and expand Microsoft’s influence further around the globe.
The company expects to train more than one million Italian workers over the course of the next few years. This move has garnered support from government officials, and appears to be a move for the company to further grow its global moat and continue to dominate the European markets as well over the long-term.
Investors Continue to Love MSFT Stock
As a leading global tech firm, Microsoft specializes in productivity applications, cloud services, and personal computing products. CEO Satya Nadella has consistently attributed the company’s strong financial performance to its competitive platforms.
In the company’s fourth quarter results, Microsoft posted $64.7 billion in revenue, amount to a 15% year-over-year increase. Notably, the company’s cloud services division generated the lion’s share of this revenue ($36.8 billion), which was 21% higher on a year-over-year basis. As Microsoft continues to invest heavily in AI, analysts expect the company’s Azure OpenAI service gaining 60% more clients. If that’s the case, there’s a lot to like about how Microsoft is positioned for growth within its core software business as well.
Analysts appear to agree, with Mizuho recently maintaining a positive outlook on MSFT stock with a $480 price target. With Microsoft announcing another $60 billion share buyback and an 11% dividend increase, there’s a lot to like about the risk-reward with this global tech giant right now.
Microsoft Remains a Growth Stock to Own Long-Term
Microsoft’s multibillion-dollar acquisitions include Activision Blizzard for $69 billion in 2023, GitHub in 2018, and LinkedIn in 2016. Now with major AI investments dominating the headlines, Microsoft is clearly in a position to dominate whichever business it intends to become a dominant player in. That’s part of this mega-cap company’s allure.
In my view, Microsoft remains a top tech stock that carries a significant market premium, for good reason. This stock isn’t cheap, but few in the market are right now. However, over the long-term, I think the company’s valuation will certainly become more appropriate for value-conscious investors.
This is a stock I think is worth holding for those who already own it, and legging into over time for those who may be concerned about multiples coming down. That said, I don’t see Microsoft’s growth slowing down anytime soon. If there was a harbor of safety in the tech space, Microsoft is about as close as it gets to that ideal. That’s a major reason why this stock trades at the premium it does.
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