After enduring its worst plunge since 2008, the stock market has staged an extraordinary recovery in 2023, with each of the major market indexes soaring more than 20% from their recent lows — and the year is far from over. This has caused some Wall Street pundits to announce the beginning of a new bull market, at least by that measure.
Yet even as some businesses have already shaken off the events of the past couple of years, others haven’t been so fortunate. As an example, the personal computing (PC) industry remains mired deep in the red, as PC shipments last year hit their lowest level since 2008, according to market intelligence provider IDC.
Despite an otherwise robust performance, Microsoft continues to feel the pinch of lower consumer spending, but there are suggestions that the PC market could finally rebound.
While that would be a welcome development for the company, there are plenty of other reasons to buy Microsoft stock before this bull market begins in earnest.
One Magnificent Artificial Intelligence (AI) Growth Stock to Buy Hand Over Fist and Hold Forever as a Bull Market Approaches
The well-known stock was severely damaged by the bear market, but its growth has held steady.
The stock market has produced an astonishing comeback in 2023 after experiencing its greatest decline since 2008, with each of the major market indices rising more than 20% from their most recent lows — and the year is far from done. Due to this, some Wall Street analysts have declared the start of a new bull market, at least by that metric.
Others haven’t been as fortunate, even though some businesses have already recovered from the events of the previous two years. Consider the personal computer (PC) sector as an illustration.
An “unprecedented expansion”
According to IDC, the PC market experienced a surge in demand during the early stages of the pandemic as a result of widespread lockdowns, at-home employment, and the widespread use of video games.
However, a crowded market and the emergence of economic problems combined to abruptly end that growth. IDC anticipates growth to stabilize, with shipping numbers eventually returning to pre-pandemic levels over the course of the upcoming year. The typical PC has a lifespan of roughly three years.
Revenue from Microsoft’s more personal computing division, which includes the Windows operating system, personal devices, search and news advertising, and gaming, fell to $54.7 billion for the company’s fiscal 2023, which ended on June 30, down 9%, offsetting advances from its other businesses.
At least a portion of the present artificial intelligence (AI) revolution can be attributed to Microsoft. The business invested $13 billion in OpenAI not long after the start-up published ChatGPT, making it one of the first to realize the potential effects of generative AI.
Since then, a wide range of Microsoft’s goods and services have included AI; this might have a substantial impact on the company’s financial performance. Microsoft’s AI-assisted Office Copilot, according to billionaire Dan Loeb of the hedge firm Third Point, could boost the company’s revenue by “$25 billion or more in software sales alone.”
Microsoft still has plenty of untapped opportunities to make money using AI; the only restriction is the company’s creativity.
Clouds in the sky
Microsoft’s Azure Cloud is another potential growth catalyst. According to data provided by Canalys, Microsoft has long been the No. 2 provider of cloud infrastructure, but its expansion keeps outpacing that of market leader Amazon Web Services. If this keeps up, Microsoft might eventually win the competition.
The business may use its AI know-how to convince customers to use its cloud products, which have a wealth of promise for boosting productivity. Microsoft recently announced the launch of Bing Chat for Enterprise, an AI-powered search bot, as well as a number of AI-driven upgrades.
According to CFO Amy Hood, who made the statement last month, “next generation AI business will be the fastest growing $10 billion business in our history.”
Microsoft’s Azure Cloud will provide a large portion of that increase.
fist to hand
Investors who purchase Microsoft stock at this time are receiving a great deal. The business has significant experience in cloud computing, SaaS, and artificial intelligence (AI). The growth prospects are starting to increase once you factor in the anticipated PC industry recovery.
Despite all of this potential, Microsoft stock is still quite affordable, trading at just 11 times current year revenues and 9 times those of the following year, which, in my opinion, is a great deal given the company’s growth prospects.
For all of the above mentioned reasons, I think investors should buy Microsoft stock in droves with the intention of holding it for the foreseeable future.
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