How to Buy Microsoft Shares and Why

With the phenomenal success of many technology stocks in recent years, many new investors dream of finding the next Tesla or Amazon. But this kind of thinking means that many older, well-established companies are often overlooked. Sure, these stocks may not offer the growth potential of a flashy new tech stock, but this doesn’t necessarily mean they should be ignored.

In this article, we will take a look at the prospect of investing in Microsoft, a member of the technology old guard. We will look at the tech company’s recent performance, the evolution in share price, examine the question ‘should I buy Microsoft stock’ and demonstrate how to buy Microsoft shares.

A Brief History of Microsoft

Although overshadowed over by Apple in recent years, Microsoft undoubtedly remains one of the most successful technology companies of all time. Before we answer the question ‘should I invest in Microsoft stock’ or demonstrate how to buy Microsoft shares, let’s take a look at some of the highlights from the company’s history.

• 1975: Microsoft Corporation founded by Bill Gates and Paul Allen
• 1985: First version of Microsoft Windows is released
• 1986: Initial Public Offering (IPO) on the Nasdaq Exchange
• 1990: Microsoft Office released
• 2000: Bill Gates steps down as CEO
• 2001: The first Xbox video game console is released
• 2008: Microsoft launches Azure Services, its foray into cloud computing services

Microsoft Financial Results

As part of the technology old guard, Microsoft has already experienced its period of high growth and established itself as a market leader as well as one of the biggest companies in the world.

However, Microsoft continues to record impressive financial performances every year and this year has been no exception. In the table below, we have highlighted some of the key indicators from Microsoft’s financial results for the year ended 30 June 2022.

Source: Microsoft Corporation – Earnings Release – Full Year Ended 30 June. 

Looking at the data above, the numbers really speak for themselves. We can see immediately that everything has increased year on year. However, whilst the increases in product revenue have been fairly mild, ‘service and other revenue’ – which includes revenue generated from Azure and Office 365 - has increased almost 30% for two years running.

This rapid increase in service revenue is potentially attributable to changes brought about by the Covid-19 pandemic. As many employees continue to work from home, companies have sought cloud-based services to facilitate this, something which Microsoft and other similar businesses have undoubtedly benefitted from.

So what about the Microsoft shares themselves? In the next section, we will take a look at the recent evolution of the Microsoft share price.

Microsoft Share Price Analysis

Microsoft has had an incredible history on the stock market since its debut back in 1986, reportedly creating thousands of millionaires amongst employees who wisely accepted stock options as part of their compensation in the company’s early days.

But how has Microsoft stock performed in recent years? Before we take a look at how to buy Microsoft shares, let’s analyse the company’s recent stock market performance.

The chart above shows the evolution of the Microsoft share price over the last six years. Despite falling more than 30% in the first nine months of 2022, Microsoft stock is still up more than 300% over the last six years.

After following a long-term upward trend, in April 2019, Microsoft became the third US company ever to reach a market cap of $1 trillion. Despite a brief setback at the outset of the coronavirus pandemic, Microsoft recovered and became one of many tech stocks that ended up excelling over the following two years. The release of the new Xbox in November 2020 allowed Microsoft to capitalise even further on the social restrictions in place at the time.

In June 2021, Microsoft announced that Windows 11 would be released later in the year. The same day, Microsoft’s market cap closed the session in excess of $2 trillion for the first time in the company’s history.

The fall in Microsoft’s share price so far in 2022 has seen market cap retreat back below £2 trillion. However, at the time of writing, Microsoft remains the third largest company in the world by this metric. But what does the future look like for Microsoft shares? In the next section, we will look at the question ‘should I buy Microsoft stock?’.

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Should I Buy Microsoft Stock?

Under the tenure of CEO Satya Nadella, Microsoft has embraced the future and shifted focus towards cloud-based products. Gone are the days of paying a one-off fee for Microsoft Office, now consumers must pay an annual subscription for Office 365. In terms of market share, Microsoft’s cloud computing service, Azure, is second only to Amazon Web Services in this rapidly growing field.

Both these services have undoubtedly benefitted from the increase of remote working since the outbreak of the Covid-19 pandemic. Whilst, in 2022, many employees have returned to the office, many others either have not or have only done so on a part-time basis, and it looks like remote working is here to stay.

Consequently, many businesses have become reliant on these core, subscription based, Microsoft services, which provide Microsoft with a reliable stream of revenue despite the uncertain economic environment.

As we saw in the previous section, Microsoft’s share price has struggled so far in 2022. However, this is more a consequence of the current turbulence in the financial markets rather than from any misstep by the tech giant. Microsoft’s 2022 results do not depict a company which is struggling financially.

Thus, there is an argument to be made that the current slump in Microsoft share price could be a rare opportunity to buy shares in one of the world’s most successful companies at a discounted rate.

Furthermore, unlike many younger tech companies, Microsoft pays a reliable quarterly dividend which is currently $0.62 per share. At the current Microsoft share price, that represents an annual dividend yield of around 1%. This may not seem like a lot, particularly given rising interest rates, but it is a reliable source of income, which is consistently growing, doubling in value since 2015.

However, there is no escaping that the outlook for the global economy remains uncertain. It is possible that Microsoft shares will continue to fall before they recover, if they recover at all. Therefore, anyone considering investing in Microsoft stock should be braced for ongoing volatility and ensure they take steps to effectively manage their risk.

How to Buy Microsoft Shares

If you are now wondering how you can get in on the action and invest in Microsoft, you may be interested to know that you can do so with Admirals! In order to learn how to buy Microsoft shares, follow these 4 steps:

• Open an Invest.MT5 account to access the Dashboard
• Click Invest next to your account in order to open the MetaTrader WebTrader   
• Search for MIcrosoft shares at the bottom of the Market Watch window and drag the symbol onto the chart
• Click New Order at the top of the screen and enter the number of Microsoft shares you want to buy before sending your order to the market!

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Besides Microsoft shares, an Invest.MT5 account from Admirals allows you to invest in over 3,000 stocks and more than 300 Exchange-Traded Funds (ETFs) at competitive terms and with no account maintenance fees. Click the banner below to register for an account today:

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• The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations. 
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