Why Microsoft Corporation (MSFT) Is the Best Investment in Cloud Computing

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A portion of Chambers’ confidence for the broader economy likely stems from the recent success at Cisco Systems. After falling out of favor back in 2011, the company is now gaining market share at the demise of competitors such as Aruba Networks, which recently provided a less-than-stellar report. Analysts at Goldman Sachs added Cisco Systems to its vaunted Conviction Buy list with a $28 price target, citing business improvement and acceleration into second half of 2013.

Semiconductor giant Intel Corporation (NASDAQ:INTC) is gaining momentum on the back of a new CEO hire and introduction of its Silvermont chip architecture for mobile devices. Former COO Brian Krzanich (pronounced “ker-SAN-itch”), a 31-year Intel veteran, succeeded longtime CEO Paul Otellini on May 16.

Krzanich has vowed to accelerate Intel’s mobile strategy with Silvermont for tablets and mobile phones, following widespread acknowledgement that the semiconductor leader has fallen behind at the expense of market share gains to competitors QUALCOMM, Inc. (NASDAQ:QCOM) and Broadcom.

Wall Street believes now is the time to be greedy when others are fearful with respect to PC market sentiment at an all-time low. Analysts at RBC Capital upgraded Intel to “outperform” with a $29 price target from a previous $24, stating the company’s 2013 gross margins will be better than anticipated and a new mobile strategy.

Foolish takeaway

While Microsoft Corporation (NASDAQ:MSFT) shares have gathered impressive momentum in recent weeks, further gains may be in store for long-term investors who believe that cloud computing is here to stay.

The company appears to be well-positioned at the beginning of a long runway with enterprise, mid- and small-business customers coming online to the cloud. This transition will result in a significant amount of recurring revenue. Secondary catalysts with new product cycles in Xbox and Windows 8 mobile devices also bode well for shares.

Microsoft’s board of directors should also provide new guidance on its cash management plan, with a 10-15% dividend raise likely before the end of 2013.

The article Why Microsoft Is the Best Investment in Cloud Computing originally appeared on Fool.com and is written by John Macris.

John Macris has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems and Intel. The Motley Fool owns shares of Intel and Microsoft. John is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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