MS shares are up 50% this year… First-ever market cap of $3 trillion [자이앤트월드]

◆ Seohak Ant Investment Guide ◆

Wall Street predicted that Microsoft, known as a major stock in the New York Stock Exchange, would enter the $3 trillion club in the first half of next year. Microsoft, along with Apple, is one of two companies with a market cap of over $2 trillion in the world. Institutional investors and Wall Street experts are paying more attention to Microsoft investment than Apple.

In the New York Stock Exchange on the 6th (local time), Microsoft stock rose 0.98% in one day to close at $326.19 per share. Its market cap reached $2.4 trillion. If you look at the stock price in the last month (November 8 – December 6), Microsoft’s stock fell 3.20%, falling behind Apple’s (9.89%), which rose in stock. However, on a year-round basis since January of this year, Microsoft’s stock jumped 49.84%, surpassing that of Apple (27.75%) or the New York Stock Exchange’s S&P 500 Index (24.08%) during the same period.

In the midst of this, on the 6th, Yahoo Finance selected Microsoft as ‘Company of the Year’. In this regard, Dan Ives, senior analyst at Wedbush Securities, drew attention when he said, “It is certain that Microsoft’s market cap will hit $3 trillion in the first half of 2022.” His investment recommendation for Microsoft is ‘above the market’s return’ (buy), and the 12-month target price is $345. This means that there is room for a 6% rise in the future based on the 6-day stock price.

According to the TipLinks tally on the same day, out of 24 Wall Street experts who had made an investment opinion on Microsoft in the past three months, 23 had a buy opinion and 1 had a hold (neutral) opinion, and no sell opinion. Compared to Apple, where 22 out of 28 voted to buy, 5 to neutral, and 1 to sell, Microsoft’s BUY opinion is relatively positive. Looking at the target price, Microsoft’s average is $368.23, ranging from $320 to $407. Experts believe the stock has up to 25% upside potential from the current level. Apple is trading at $90-200 (average $169.96), with up to 18% upside.

There are three main reasons for the positive evaluation of Microsoft. The first is Microsoft’s scalability in the cloud market. Ives senior analyst explained, “Currently, the transition to the cloud era is only about 35%, and Microsoft is a company leading the cloud era.”

The second is the share price rise and the financial statements that are evaluated as sound. Microsoft stock jumped 49.84% this year, outpacing Apple (27.75%) and S&P 500 (24.08%) on a year-over-year basis. A Yahoo Finance spokesperson said, “Microsoft’s financial condition fully supports its share price rise in the past 12 months, with sales of $176 billion, an increase of nearly 20% compared to the same period a year ago.”

Third, it is expanding across the information technology (IT) business beyond the cloud. On the 22nd of last month, Wells Fargo analyst Michael Turin said in a customer memo that he had a “buy” rating on Microsoft and offered a 12-month target price of $400. In this regard, he said, “Microsoft has already achieved a market cap of $2.5 trillion once, and has strong revenue generating power in terms of cloud infrastructure services (IaaS), cyber security and productivity management, Office 365 series (E3 · E5) and Microsoft 365, etc. There is,” he explained.

Microsoft is also attracting attention as a ‘metaverse-related stock’. In 2016, when the company released the mixed reality (MR) device ‘HoloLens 1’, it only produced for professionals and businesses using the Windows operating system (OS). industry forecast. HoloLens 2 was used to assemble the manned spacecraft Orion to carry out the lunar exploration ‘Artemis Project’ promoted by NASA with the goal of 2024, and is also used for remote medical treatment for island residents in Japan and other countries. MR is a concept that explains the metaverse (fusion of the virtual world and the real world) along with virtual reality (VR) and augmented reality (AR).

Meanwhile, Morgan Stanley recently picked Microsoft as one of the three dividend stocks to buy in the New York Stock Exchange. Investing in high-quality dividend stocks is a good idea in a situation where market volatility is increasing due to inflationary pressures due to the appearance of COVID-19 micron mutations and supply disruptions, and the Federal Reserve (Fed) tightening the market money line (accelerating tapering and the possibility of an early rate hike). because it is advantageous.

Keith Weiss, a researcher at Morgan Stanley, said, “Microsoft’s dividend yield is only 0.8%, so it cannot be called a ‘dividend aristocrat’, but the company’s cash flow is stable and its balance sheet is healthy, so it can provide stable cash dividends to shareholders. Operating profit growth is also expected,” he explained. In September of this year, Microsoft announced that it would buy back up to 2.7% of its outstanding shares while raising its dividend. The company first began paying quarterly dividends in 2004, and as a result of raising dividends for 12 consecutive years since then, it currently pays $0.62 per share as a shareholder dividend.

According to the Korea Securities Depository as of the 7th of this month, Microsoft is the top 8 stock ($450.06 million) with the most net purchases by Korean investors this year.

Meanwhile, on the 3rd, local media Forbes said, “The asset worth investing in in 2022 is stock.” Among them, Microsoft is more worth buying than Tesla or Amazon.”

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