• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing

Here's How I'm Playing Microsoft

CEO Satya Nadella has been ahead of the curve focusing on the cloud.
By STEPHEN GUILFOYLE
Mar 30, 2020 | 11:30 AM EDT
Stocks quotes in this article: MSFT, WORK, ZM, AMZN, ADBE, CRM, NOW

Working remotely...775%. That was the number. Stopped me in my tracks. Microsoft (MSFT) announced that there has been a 775% increase in demand for cloud services in regions currently with orders that are currently in effect to either shelter in place or to socially distance from one another. Along those lines, the firm announced nearly 10 days ago that Microsoft Teams, which is a competitor to both Slack (WORK) and Zoom Video (ZM) , had passed 44 million daily users, up from just 20 million back in November. The firm also announced that usage for Windows Virtual desktop had grown threefold.

In fact, usage has ramped up so dramatically and so quickly that Microsoft has had to temporarily restrict certain features across platforms, including placing limits of free or trail offers, and video resolution in order to avoid disruption to services.

In addition, one could surmise that demand is simultaneously building for the firm's software licensing business such as Office 360 and Microsoft Dynamics, which is a line of client management applications. This type of business is key as it represents recurring revenue, which has become the most important kind of revenue, even before this pandemic. This also allows a firm to better shape forecasts in what is now an unpredictable time.

More Than Business

As one might expect, gaming has been hot in this environment as well. The firm's Xbox division has been reported as requesting that developers release updates to games during off-peak hours in order to limit strain. Microsoft is planning to take steps to increase the firm's cloud capacity, according to the Financial Times.

Interesting

Several months ago, investment focus was on being environmentally responsible, and Microsoft was a champion in that environment after CEO Satya Nadella had expressed his interest in not just being carbon neutral, but in the firm achieving a net negative carbon footprint for its entire existence (since 1975) by the year 2030. Not that this is no longer important, but it does reveal just how in tune the firm has been since Nadella has been at the wheel, and focusing on the cloud ahead of the curve though leadership in the hybrid cloud is representative of that theme.

Azure remains a top choice for business as the cloud, once viewed as a "growth" industry, has accelerated through forced evolution into what it is now... a business staple. This is why, I also consider Amazon (AMZN) to be a key holding, having nothing to do with that firm's e-commerce retailer. For me, Microsoft is a long-time holding, first as a software play, then as a key member of my "cloud" group, and now as part of my "work remotely" group that also includes the likes of Adobe (ADBE) , Salesforce (CRM) , and ServiceNow (NOW) .

Can one completely mitigate downward risk in a long portfolio through proper allocation meant to take advantage of the new normal? Of course not. Not in the era of passive investment anyway. That said, the goal is that one is open to the idea of exposure to beat the market. Beat the market regularly, and at least the majority of the time, the P/L takes care of itself. No guarantees, but through sentient navigation of the marketplace, one can improve their chances, and if this game is not one of probabilities, I do not know what is.

The Chart

Remember this chart? Probably not, unless you follow me real closely. I drew this one up for you back in January before the name popped just after earnings. What I find so remarkable here is just how well the algorithms have played within the lines of the Pitchfork. I've got to say how it really does surprise me that a lot traders no longer use these Pitchforks, because they really, at least at times, seem to be recognized by these high speed algos.

Anyway, the shares do seem to have at least paid respect to the lower trend line at market lows, and also at the central trend line for both short-term support and resistance. Even with a $60 range over six weeks, I can honestly say that this name has not broken at any point over that time, technically. My $200 price target for Microsoft remains unchanged at this time. I had originally placed a panic point of $156 on these shares that I had ignored as I rearranged my entire book once the the broad market selloff had become recognizable, at least to me. At this time my preference would be to add at the 200 day line, given a second chance, with a new panic point of $135, which would have to be enforced, as retest of the lows would be a very negative sign.

(Microsoft, Amazon and Salesforce are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Stephen Guilfoyle was Long MSFT, AMZN, ADBE, CRM equity.

TAGS: Investing | Markets | Stocks | Technical Analysis | Trading | Software & Services | Technology | Technology Hardware & Equipment | Video Games

More from Investing

In a Week Full of Surprises, This Was the Market's Biggest

James "Rev Shark" DePorre
Feb 3, 2023 4:42 PM EST

We had the Fed's rate decision, jobs numbers, and mega-cap tech earnings land. But here's what was the wildest action.

3 High-Yield REITs for Safe Dividend Income

Bob Ciura
Feb 3, 2023 2:31 PM EST

These names have joined the ranks of the world's most elite dividend growth companies as Dividend Aristocrats and/or Dividend Kings.

The Charts Just Don't Give Much Affirmation on Affirm Ahead of Earnings

Bruce Kamich
Feb 3, 2023 1:54 PM EST

Here's the picture we see from this payment company.

I Found a Good-Looking Arrowhead in This Biotech ETF

Bruce Kamich
Feb 3, 2023 12:50 PM EST

Let's review the charts of XBI, the SPDR S&P Biotech ETF.

Holy Fed, Batman! FAANG Has a Major Toothache!

Jim Collins
Feb 3, 2023 12:23 PM EST

Here's why the markets are sounding a lot like the campy 'Batman' show -- and how to make sure you don't succumb to the market's Joker.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 02:58 PM EST REAL MONEY

    Sarge Guilfoyle Breaks Down the Jobs Report, Fed Policy and Stocks!

    Watch it here!
  • 11:35 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Trading an Irrational Market
  • 02:10 PM EST REAL MONEY

    Fed Rate Decision

    Fed Lifts Benchmark Rate by 25 Basis Points, Sees ...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login