Key takeaways
- Microsoft is partnering with Meta to offer what’s being dubbed the “virtual office of the future.”
- Microsoft held a launch event where they unveiled various new products, including an AI-powered graphic design app that indicates the company is investing in the field of artificial intelligence.
- Microsoft continues to bring in revenue from various streams, ranging from business communications platforms to cloud-based security.
Microsoft has been making headlines lately as the company has announced deals with other tech giants like Meta and Apple. Even though fears over soaring inflation have impacted the stock market throughout 2022, Microsoft has recently seen its share price rise based on positive news and launches - like an aging hip hop star finding new audiences sampled on a younger artist’s track.
Microsoft made some waves with the new partnership with Meta to bring its products to the virtual reality space, among new product launches.
We’ll look at all of the recent news with Microsoft that you should know about if you’re considering investing in this company, as a lot has been happening lately.
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What’s happening with Microsoft stock?
A few things happening with Microsoft that investor are buzzing about.
Microsoft raised its dividend
On September 20, Microsoft announced that the board of directors had declared a quarterly dividend of $0.68 per share, about a 10% increase from the previous quarter’s dividend. This should make the stock more attractive to income investors looking for solid companies. The company is generating plenty of cash, and the earnings should cover the distributions easily. Dividend investing is ideal if you’re looking to fight inflation and want to smooth out your exposure to volatility.
Microsoft continues to invest in cloud technology.
Microsoft continues to invest in the cloud space, where they compete with Amazon. The digital global transformation is helping the company increase its revenue. Revenue from Intelligent Cloud was $20.9 billion for the quarter ending on July 30, 2022. The Intelligent Cloud business sector includes Azure (public cloud for application hosting), SQL Server, Windows Server, and enterprise services.
Microsoft Teams grows
Microsoft Teams has grown to 270 million monthly active users, which means they’ve outperformed the popular Slack platform, which has only an estimated 18 million active users. Teams is now the most popular business communications platform in the world. The app is available in 181 countries and 44 different languages.
What you need to know about the Meta-Microsoft partnership
Microsoft CEO Satya Nadella appeared at the Meta Connect 2022 conference recently. Microsoft and Meta recently announced that they would be partnering. Microsoft’s enterprise apps will be integrated within Meta’s Horizon virtual office environment.
Here are some of the highlights of this Meta-Microsoft partnership:
- Mesh for Microsoft Teams will come to Meta Quest devices. This will allow people to connect and collaborate as if they were working in person.
- Microsoft 365 apps will be available on Meta Quest devices. This would allow users to access apps like Word, Excel, and Outlook in virtual spaces.
- Microsoft Intune and Azure Active Directory will support Meta Quest Pro and Meta Quest 2. This would give users the security and management control that they get from PCs in virtual reality.
- Both companies are also still working on ways to bring Xbox cloud gaming to the Meta Quest Store. This feature would allow gamers to stream Xbox games to phones, tablets, and the Meta Quest platform.
Meta CEO Mark Zuckerberg believes that Meta’s virtual reality platform will be the virtual office of the future. The goal is to share and collaborate with others as if you were together in real life, according to Nadella. This partnership is a vote of confidence from Microsoft, as many investors have soured on Meta in 2022.
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Microsoft Surface Event
Microsoft revealed the Surface Laptop 5 at its annual launch event on October 12, 2022. The laptop officially goes on sale today, October 25. Many critics weren’t excited about the recent Surface news; some even feel the company has given up on innovating features for it, as the newest model looks just like its predecessor.
Microsoft ended up rolling out three major new products at the event: the Surface Pro 9, the Surface Laptop 5, and the Surface Studio 2+ all-in-one computer. The company also announced that it would be adding iCloud photos to Windows 11 and Apple Music to Xbox.
While the company announced various new creativity and productivity tools for users, the one notable product was the AI-powered graphic design app that allows you to generate any image you can imagine. Microsoft Designer will use the same AI technology that’s found in DALL-E 2 to allow you to create unique images, digital postcards, and much more. With the Designer app coming to Microsoft Edge, users can create social media content from their browsers.
What’s next For Microsoft stock?
It’s difficult to know with certainty what we can expect from the stock market in 2022 due to all of the volatility that this year has brought us — from the war in Ukraine to soaring inflation that can’t be tamed.
Here are a few fascinating points to consider when deciding if you should invest in Microsoft stock.
Inflation is still soaring and causing stock market volatility
The U.S. Bureau of Labor Statistics reported on the September inflation data on October 13, causing many tech stocks to fall the next day. Since the Consumer Price Index (CPI is the generally accepted measure of inflation), rose to 8.2% in September, many experts were concerned that this would lead to more interest rate hikes from the Fed and further uncertainty in the stock market. The biggest concern with the stubborn inflation numbers is that additional rate hikes could officially tip the economy into a recession.
It’s worth noting that Microsoft stock closed on October 13 at $228.56, and then by Monday morning, it was up 4% at times, hovering around the $238 mark until it would ultimately close the day at $237.53. So despite everything we just mentioned about inflation, Microsoft has performed well recently. We’ll see how they weather future rate hikes, but the stock closed at $247.25 yesterday, up 2.12% on the day.
Microsoft’s acquisition of Activision Blizzard will bring in more revenue
Many experts are hopeful that Microsoft’s acquisition of Activision Blizzard will go through in 2023, despite the current regulatory delays. It’s believed that this deal would add about 400 million new gamers into the orbit of Microsoft. The U.K.’s Competition and Markets Authority is currently investigating the acquisition to ensure that it doesn’t harm competition; there are concerns that Microsoft could pull “Call of Duty” from Sony. If the deal does go through, Microsoft will own popular games like “Call of Duty,” “Candy Crush,” and “World of Warcraft.” We will be paying attention to see how this transaction unfolds as the $68.7 billion acquisition would be a game-changer.
Microsoft is introducing new products
We already mentioned the Microsoft partnership with Meta, which has dominated headlines, but the company has other new projects that could be lucrative shortly. The most noteworthy new product is Microsoft Cloud for Sovereignty, which is designed to meet the cloud-based needs of governments and the public sector. This product should be especially helpful in Europe when it comes to helping countries complete digital transformations. A Microsoft executive recently mentioned how many companies are speeding up digital transformations with cloud-based services due to the European energy crisis.
Stock analysts are declaring Microsoft stock a buy
Michael Turrin from Wells Fargo
All eyes will be on the next Microsoft earnings report announcement on October 25. We will see what kind of growth Microsoft has had in its different applications like Microsoft 365 suite, Dynamics, and Power Platform. Microsoft is also expecting to see significant growth in Surface revenues as consumers crave premium devices.
How should you be investing?
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The bottom line
Companies like Microsoft will continue to do well with cloud-based services as the world continues its digital transformation. Microsoft has a wide variety of revenue streams that will bring in money for the company. With many analysts calling Microsoft a buy, it’s definitely worth looking into.
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