• Sat. Dec 10th, 2022



Microsoft’s diversification helps it stand out from other mega-tech stocks

Satya Nadella, CEO of Microsoft, speaks with Herbert Diess, CEO of Volkswagen AG (not pictured), about a joint project between the two companies called the Volkswagen Automotive Cloud in Berlin on Feb. 27, 2019.

Sean Gallup | Getty Images

Many people look at Microsoft and see a dusty company that has benefited from the shift to cloud computing. That’s not wrong. It just overlooks the reality that Microsoft still gets most of its revenue from other markets. The 45-year-old company sells ads, game consoles, operating systems, PCs and other products.

Investors like that Microsoft is diversified. That attribute distinguishes it from other highly valued technology companies, including cloud rivals Amazon and Google. The pandemic did not weigh on second-quarter results as much as it did for Google, which experienced its first revenue decline. And older assets continue to enable Microsoft to invest in newer ones.

“Windows provided the financial capacity for Microsoft to undergo a significant investment in capital and building a business” in cloud infrastructure, said Nicholas Puncer, a portfolio manager at Bahl & Gaynor Investment Counsel, based in Cincinnati. The firm first bought Microsoft shares in the early 2000s. At the end of the second quarter Microsoft was its biggest holding, according to a filing. Puncer said that Microsoft is a better cash producer than it’s ever been and that newer products such as Teams set up the company for greater monetization.

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