Who would have thought that Microsoft stock would be faring better than its more celebrated peers in the technology market? But that is exactly what is happening right now.
The company’s shares have fallen just 10% since the start of October — while the likes of Amazon and Apple have tumbled more than 20%.
Microsoft is viewed by many investors to park assets until the market behavior steadies.
Bloomberg has a piece on this revealing how investors are rewarding the Redmond based software company for its enterprise business. This stability has been missing from more consumer-focused firms, which are more susceptible to volatility based on their sales performance.
Wedbush analyst Daniel Ives:
“Microsoft is being viewed by many investors as a place to park your assets while we go through this white-knuckle period. The high-flier consumer names are getting taken to the woodshed.”
The majority of Microsoft revenue comes from the products it sells to businesses.
And increasingly, this has been coming in the form of subscription-based cloud services or corporate software delivered as multiyear deals. As a matter of pure fact, Gartner estimates that spending on enterprise software is expected to rise 8.3% in 2019.
Making it the fastest growing segment within information technology.
Good place to be in for Microsoft, which saw its commercial cloud segment expanding 56% to reach the highs of $23 billion in the year that ended June 30. Alongside Azure, its Office 365 programs also lead the market in cloud powered productivity tools.
Just reward, some would say, for Redmond, after years of missing opportunities in the digital advertising, mobile and social media space.