Now up 14% year-to-date and by more than over 50% year-over-year, Microsoft (NASDAQ:MSFT) stock remains among the top “Magnificent 7” plays. Besides OpenAI and ChatGPT, the company has other key developments, like AI integrations and cybersecurity, to increase its growth rate.
Now among the most notable AI stocks, some bears say the stock’s risen too much too fast. That’s a thesis that makes sense. MSFT stock trades at a forward price-earnings multiple of 32-times and a price-sales multiple of nearly 14-times. That said, there are reasons why this stock remains a buy right now. Here’s the bullish case behind Microsoft.
New Surface Chief and MSFT Stock
Microsoft has appointed Pavan Davuluri as the new head of Windows and Surface, consolidating both roles. Following the departure of Panos Panay, Davuluri led Surface, while Mikhail Parakhin managed Windows. Parakhin has since left, leading to the merger of positions under Davuluri.
With over 23 years at Microsoft, Pavan Davulur now heads the Windows and Surface division under Rajesh Jha’s supervision. He played a key role in collaborating with Qualcomm and AMD on custom Surface processors.
Mikhail Parakhin, formerly overseeing Windows engineering, transitions under Kevin Scott amid a potential departure from Microsoft.
This executive reshuffle appears to be one of the many moves Microsoft has made to push for efficiency. In a word, the company is looking to create efficiencies at all levels of its company.
After announcing various rounds of layoffs over the past year, Microsoft’s management team isn’t exempt from these moves. So, investors banking on improved efficiency over the long-term may want to view these announcements with this lens.
Changes on Chromium
Microsoft has also recently integrated changes into Chromium, to enhance text rendering on Windows devices.
Chrome (version 124) now supports contrast and gamma values from Windows ClearType Text Tuner, aligning with Edge’s improvements. This allows for better text readability on web pages.
Previously, Chrome didn’t use ClearType’s enhancements because of hard-coded rendering values. With this integration, Chrome now benefits from ClearType Text Tuner adjustments like other native Windows apps.
Led by Kurt Catti-Schmidt, Microsoft improved text rendering in Chromium browsers, prioritizing accessibility enhancements.
This aligns with the company’s commitment to enhancing Chromium-based browsers on Windows, which was initiated over five years ago with Edge’s transition. Microsoft’s contributions extend to various performance aspects in Chrome, including scrolling and touch support.
The Bottom Line on MSFT Stock
Microsoft has become one of the most reputable names in the AI race. That’s for sure.
As a company that’s doing everything it can to improve its efficiency metrics and its product portfolio, there’s a lot to like about making its cash cow even more attractive to existing investors.
With the company’s strong financial standing, even its own CEO, Satya Nadella, is confident to achieve its $500 billion revenue goal by 2030.
Such a goal would put the company on target for potentially even greater capital appreciation, despite multiples many bears would suggest already factor this enthusiasm in.
The thing is, we’re so early on in the AI innovation wave, that it’s impossible to know who will come out ahead.
That said, Wedbush analyst Daniel Ives has maintained his bullish stance on Microsoft, putting forward an outperform rating on MSFT stock in his latest note, raising his price target to $500 per share. Bullish AI customer checks and other factors played in this assessment.
Wall Street and Main Street appear to be on the same page when it comes to Microsoft right now. For all investors, that’s a great thing. The thing is, I think this momentum can continue, albeit with bumps in the road. To me, MSFT stock remains one that’s worth holding long-term.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
