According to Forrester Research analyst Dave Bartoletti, Microsoft’s cloud offering Azure is now a strong number two in public cloud while Google, IBM, and others battle it out for the number three slot. And market leader AWS will not have it easy in 2017 due to heightened competition. Not only Cloud, Microsoft may have other unlikely catalysts in the form of its Surface series. November was the best month on record for consumer sales of Microsoft’s Surface devices. It is also eating into Apple’s market share. With Mac book Pro disappointing consumers, it is expected to give Apple a tough fight in 2017. (See Also: MSFT Stock: Is This Microsoft Corporation’s (MSFT) Next Big Play?
While mobile has been a big failure for Microsoft, rumors are rife that one can still expect a surface mobile device in 2017 which it plans to make an ultimate mobile device. With its devices like Surface RT (1) and its collaboration with QUALCOMM, Inc. (NASDAQ:QCOM) to deliver the full Windows 10 experience on devices running on Snapdragon mobile chips, it can really change the dynamics of the PC industry in 2017. It can reenergize its sluggish PC segment.
In 2016 Microsoft Corporation (NASDAQ:MSFT) has placed a number of risky alternate bets. Some of these bets are Microsoft joining the Linux Foundation in November, launching a collaboration tool “Teams” to compete with Slack, opening up its virtual assistant “Cortana” to third-party developers. It also dived into AI and deep learning. While Microsoft’s alternative bets seem to be closer in line with its core mission, it still has to ensure it’s making the right ones (2) and does not end up on the lines of Google’s moonshots.
The gaming division which reported a revenue decline of 5% last quarter could be in for an exciting run in 2017 with its Xbox Scorpio scheduled for release in 2017. It is presently the no 2 in gaming console market. AR/VR could be unlikely growth catalysts for Microsoft with its HoloLens device and booming VR gaming market.
Putting It All Together
On valuation terms, Microsoft Corporation (NASDAQ:MSFT) is trading at 30 times earnings, marginally above the industry average of 29 for business software companies. It is not that expensive given its overall growth potential and alternative bets. It is an exciting phase for Microsoft Corporation as well as MSFT stock. Now the company has to nail it down with its execution in all its major segments. 2017 could be the year where Microsoft stock may reach new highs. In all, Microsoft stock could be a safe long-term bet, with any pullbacks a good buying opportunity.
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