Microsoft (NASDAQ: MSFT) has achieved a 15% year-to-date gain, outperforming the S&P 500 index’s 2% increase, primarily driven by rising Azure demand amid the AI boom. Since early 2023, MSFT stock has doubled, with its Price-to-Sales (P/S) ratio rising from 9x in 2022 to 13.3x currently. Revenue has increased by 36%, from $198 billion to $270 billion, alongside a 1% decrease in total shares outstanding due to approximately $86 billion in buybacks since 2022.
Key Growth Factors
- Cloud Services: Azure and Microsoft 365 continue to drive growth.
- Artificial Intelligence: AI is contributing over $13 billion annually to revenue.
- Gaming Expansion: The Activision Blizzard acquisition has strengthened Microsoft’s gaming unit.
While MSFT is trading near $480, with a P/S ratio slightly above its four-year average, its valuation may grow further due to strategic AI initiatives. However, risks remain, including past stock declines due to inflation and capital expenditures exceeding $144 billion since 2022, raising concerns over the returns on these investments.
