Microsoft Corp.’s (NASDAQ: MSFT) long-awaited earnings report came out Wednesday, and the company beat expectations all around.
This switch has led to an uptick in demand for Microsoft’s cloud and remote collaboration tools, which has boosted their numbers significantly.
These numbers are impressive – but the market didn’t react as you might expect to these impressive numbers.
I’m not worried. In fact, I love it. I see this drop as a great time to pick up more shares of MSFT. Based on what I’m looking at, this stock has much more upside ahead.
Microsoft Will Continue to Deliver
In case you missed it – the company reported $38 billion in revenue for the second quarter – up 13% from the same period in the prior year. Earnings for the quarter came in at $1.46 per share, destroying analysts’ prediction of $1.34 share.
A further breakdown showed that the company is bringing in money from every angle:
- A 6% increase in revenue from the productivity and business processes segment, to $11.8 billion.
- A 19% surge in sales of Office 365 Commercial.
- A 17% bump in revenue in the intelligent cloud division, to $13.4 billion.
- A 14% increase in personal computing sales, to $12.9 billion.
Yet investors still sold after earnings. Microsoft’s stock fell more than 2.5% in after-hours trading following the report. It went from around $211 on Wednesday and was trading near $202 Friday.
There could be a handful of reasons for this, including the concerns that Microsoft could face slowing growth in its Azure cloud business due to market leader Amazon Web Services.
And many worry that with a second COVID-19 wave, many businesses could pull back on IT spending to help control their budget.
But here’s the thing about a second wave – business still has to run and will have to do so remotely. That leads me to believe that Microsoft will still be an integral part of the day-to-day.
That’s why I’m not following the herds of worried investors. Instead, I’m looking to score big on the demand Microsoft has seen and will see in the future.
And here’s how…
Pick Up Shares of MSFT and Hold for the Long Haul
The question of the hour is this: When does the pandemic end? Of course, no one knows.
Truthfully, we could be looking at a stay-at-home economy for three months, six months, or even longer. As long as we stay at home – remote work will remain the norm.
And the need for technology to support this style of work will remain, meaning Microsoft will continue to see a boost from the current climate.
The stock has sold off from recent highs, but I feel that this sell-off creates a buying opportunity.
So, I’m not buying into the worries that other investors seem to have. I’m calling Microsoft a buy now, and I’ll be looking to buy even more on any pullback I see.
— Andrew Keene