Is Microsoft a good long term investment?
MSFT boasts an average earnings surprise of 8.8%. Earnings for Microsoft are forecasted to see growth of 18.6% for the current fiscal year as well. Because stock prices react to revisions, buying stocks with rising earnings estimates can be very profitable.
Microsoft is primed to deliver stronger growth going forward
Microsoft's revenue in the first six months of fiscal 2024 (which ended on Dec. 31) increased 15% year over year to $118.5 billion. Meanwhile, its adjusted earnings over that time jumped 30% to $5.92 per share.
So, if you had invested in Microsoft a decade ago, you're probably feeling pretty good about your investment today. A $1000 investment made in February 2014 would be worth $11,326.86, or a gain of 1,032.69%, as of February 9, 2024, according to our calculations.
According to Various Analysts, Microsoft Stock the Price Per Share at $420 by the End of 2024, $480 in 2025, $530 in 2026, $530 — $580 in 2027, $580 — $630 in 2028, $680 in 2029, $730 in 2030, $3,000 or Even $5,000 in 2035, $10,000 in 2040, $50,000 or Even $100,000 in 2050, $50k to $100k+ in 2060, According to ...
Microsoft 10-Year Performance
With its closing price of $402.65 on March 5, 2024, it recorded an incredible gain of 1,148%. This is even more than Apple's outsized gain of 916% and marks a more than 12x return for Microsoft investors who held the stock for the full 10 years.
Microsoft stock price stood at $420.45
According to the latest long-term forecast, Microsoft price will hit $450 by the end of 2024 and then $500 by the middle of 2025. Microsoft will rise to $600 within the year of 2026, $700 in 2027, $800 in 2028, $900 in 2030, $1000 in 2033 and $1100 in 2035.
With its 3-star rating, we believe Microsoft's stock is fairly valued compared with our long-term fair value estimate of $420 per share, which implies a fiscal 2024 enterprise value/sales multiple of 12 times, adjusted P/E multiple of 36 times, and a 1% free cash flow yield.
A $10,000 Investment in Microsoft in 1986 is Worth $39 Million Today!
With Microsoft trading at fresh all-time highs, it seemed like a good time to see what $1,000 invested in Microsoft stock 20 years ago would be worth today. Have a look at the above chart and you'll see that if you put a grand into MSFT stock two decades ago, today it would be worth more than $24,000.
A $10,000 investment in Microsoft 30 years ago, at the start of January 1994, would be worth nearly $2.4 million today with dividends reinvested.
Is Microsoft a good buy now?
Microsoft has a conensus rating of Strong Buy which is based on 33 buy ratings, 1 hold ratings and 1 sell ratings. The average price target for Microsoft is $471.71. This is based on 35 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
AI is likely to send shares of this tech giant higher over the next three years. Microsoft (MSFT -0.17%) has rewarded investors handsomely in the past year with impressive gains of 55%. Even better, the tech giant's latest results indicate that it could sustain its impressive rally going forward.
As of 2024-02-19, Microsoft Corp's intrinsic value as calculated by the Discounted Earnings model is $292.58. It's currently trading at a price of $404.055. Therefore, the margin of safety based on the DCF model is -38.1%. The company is modestly overvalued.
Significant cash reserves have helped Microsoft successfully venture into cloud computing, video games, artificial intelligence (AI), consumer products, and more. The company is active in a diverse range of high-growth markets, making it one of the most attractive investment options right now.
Microsoft has the best dividend yield: $0.75 per share each quarter, which translates to an annual yield of 0.74%. Holding Apple stock will yield 0.49% annually, whereas Nvidia stock yields 0.03%.
This isn't the first time Microsoft has overtaken Apple as the same happened in 2018 and 2021.
Now, in 2023's second half, that resistance has greatly diminished. Besides, Microsoft will undoubtedly continue to make waves with its leading-edge, AI-friendly product lines. Therefore, MSFT stock is likely on a path to $400 or more, and it earns a confident “B” rating.
Microsoft stock's sound track record, combined with its leadership in generative AI and cloud computing, makes it a compelling investment opportunity in 2024. The company offers a unique blend of growth and stability, fueled by its extremely large moat and constant innovation.
Amazon has a conensus rating of Strong Buy which is based on 41 buy ratings, 0 hold ratings and 0 sell ratings. The average price target for Amazon is $209.74. This is based on 41 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
Buffett has never owned Microsoft stock, and for a very good reason. Buffett is one of the world's best investors, and he loves to own stakes in companies with steady growth, strong profitability, great management, and a plan to return money to shareholders.
What if I invested $1000 in S&P 500 10 years ago?
According to our calculations, a $1000 investment made in February 2014 would be worth $5,971.20, or a gain of 497.12%, as of February 5, 2024, and this return excludes dividends but includes price increases. Compare this to the S&P 500's rally of 178.17% and gold's return of 55.50% over the same time frame.
Had you invested $1,000 in Microsoft at its IPO, you would have acquired 47 shares at $21 per share. Adjusting for the stock splits, you'd actually have 13,536 shares today with a cost basis of $0.0729 per share.
In order to hit your goal of $1 million in 10 years, SmartAsset's savings calculator estimates that you would need to save around $7,900 per month. This is if you're just putting your money into a high-yield savings account with an average annual percentage yield (APY) of 1.10%.
Those gains translate to a 36.6% compound annual growth rate for Apple compared to a 7.4% CAGR for the S&P 500 in that time. That means that $10,000 in AAPL stock purchased 20 years ago would be worth about $5.08 million today, assuming reinvested dividends.
As a result, those who bought $10,000 worth of Amazon's stock in January 2013 would have $78,138.51 today, with an annual rate of return of 22.42%. The growth proves the importance of holding stocks over the long term, as doing so can safeguard your investment against short-term headwinds.
