Could Microsoft (NASDAQ:MSFT) be the most magnificent of the “Magnificent Seven” mega-cap technology companies? It’s certainly possible, as MSFT stock just keeps on moving higher and putting the short-sellers in the poorhouse. So, if you’re looking for prime portfolio exposure to artificial intelligence (AI), cloud computing and much more, count on Microsoft in 2023 and 2024.
Microsoft has made a habit of winning lately, and it’s not too late for reluctant investors to get on board. The time to act is now because, frankly, you need to have at least one gen-AI stock in your portfolio.
There are a number of ways to get AI-market exposure, no doubt. However, investing in Microsoft is simple, relatively safe and a smart move as the share price is bound to move higher.
MSFT Stock Insider Selling: Should You Be Worried?
To be fair and balanced, I must start off with some bearish-sounding news. Yet, maybe it’s not as scary as it might seem.
Reportedly, insiders at Microsoft have collectively sold $49 million worth of the company’s shares. Among the alleged sellers is Microsoft President and Vice Chairman Bradford Smith. Allegedly, Smith divested $17 million worth of Microsoft shares.
That’s important information, but it’s not a sufficient reason to avoid MSFT stock. Truthfully, $49 million of insider share selling isn’t a huge amount for a gigantic company like Microsoft. Remember, Microsoft has a market capitalization between $2 trillion and $3 trillion.
Besides, the Microsoft share price has moved higher in 2023 irrespective of any insider stock sales. There are a number of reasons for this, but among them is Microsoft’s leadership position in multiple technology niche segments.
To reinforce this point, I’ll defer to Jonathan Cofsky, portfolio manager at Janus Henderson Investors. As he concisely explained, Microsoft “has a resilient business model, it is executing extremely well, it is a clear winner in AI.”
Cofsky added that overall, Microsoft “has the most secular tailwinds and fewer secular risks than other companies.” In other words, Microsoft is a winner even if a handful of insiders decided (probably unwisely) to trim their stock positions.
You Can’t Beat Microsoft for Gen-AI and Cloud Exposure
Microsoft has definitely evolved since the days when it was mostly known for bug-ridden personal computer (PC) operating systems. Nowadays, Microsoft is a generative AI leader and a redoubtable cloud-computing competitor.
First of all, Microsoft’s first-quarter fiscal 2024 results show that the company’s GAAP-measured Microsoft Cloud services revenue rose 24% year over year. Furthermore, Microsoft’s Azure and other cloud services revenue increased 29%.
Plus, Microsoft embedded AI functionalities into Azure and a range of other product categories. The company has effectively deployed generative AI technology since Microsoft acquired a 49% stake in gen-AI chatbot developer OpenAI.
Moreover, Solita Marcelli, chief investment officer Americas at UBS Global Wealth Management, remains bullish on top-tier tech companies like Microsoft. “The quarterly results reinforce our long-term positive view on AI and the software industry in particular,” Marcelli recently wrote, and I agree 100%.
MSFT Stock Short-Sellers Will Get Clobbered
Microsoft’s competitors will have a tough time in 2024. The company continues to push the envelope with top-tier products for generative AI, cloud computing and other high-need categories.
Throughout 2023, the MSFT stock short-sellers have gotten clobbered, and I expect them to continue losing money in 2024. It won’t be too long before Microsoft is a $3 trillion company, and you can bet on a true tech-market juggernaut right now. It’s as simple as buying a few Microsoft shares and just letting them sit in your portfolio for years or maybe even decades.
On the date of publication, David Moadel 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.
