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  • Writer's pictureDevin Zugic

Will Microsoft Come Out on top?

Microsoft ($MSFT) - Cloud, Work From Home Play - Long

By Devin Zugic

Twitter: @DevinTrader

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Company Details: Microsoft Corporation is a technology company. The Company develops, licenses, and supports a range of software products, services and devices. The Company's segments include Productivity and Business Processes, Intelligent Cloud and More Personal Computing. The Company's products include operating systems; cross-device productivity applications; server applications; business solution applications; desktop and server management tools; software development tools; video games, and training and certification of computer system integrators and developers. It also designs, manufactures, and sells devices, including personal computers (PCs), tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories, that integrate with its cloud-based offerings. It offers an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and it provides solution support and consulting services.

The keywords to remember above in bold are productivity, business processes, and intelligent cloud. During this coronavirus bear market one old school tech player is experiencing growth in key areas of their business. Their cloud platform Azure was already making solid gains in market share and going head to head with Amazon’s AWS. As of February 2020 Microsoft is second in the cloud wars, Canalys reports AWS with 32.4% of the market, Azure at 17.6%, Google Cloud at 6%, Alibaba Cloud close behind at 5.4%, and other clouds with 38.5%. It has rallied 21%, from a low of 132.52 to an after hours high of 162.60. The coronavirus bear market created a buying opportunity for this tech giant and on Saturday they released some amazing numbers. Azure cloud business usage increased dramatically in geographic areas that the coronavirus hit hard with mandatory work from home requirements and social distancing. The cloud services demand soared 775%, the company said in a blog post in addition the company’s Teams product line had about 44 million users logging in, a sharp jump in daily active users. Windows Virtual Desktop and Power BI traffic usage were also up. There is still a lot of uncertainty with global recession in the very near future due to the coronavirus. The St. Louis Federal Reserve is estimating up to 47 million people will eventually be unemployed in the United States, which would put the unemployment rate at 32.1%! Even with a grim outlook MSFT will see growth as companies begin to recover in Q4 or Q1 of 2021. The virus forced many companies to buy supplies needed for employees to work from remote locations, which will become more normalized going forward. Watch for a pull back, because there are still many days ahead with negative news that could shock the markets again. Plus the upcoming earnings season will reveal just how affected companies and sectors are. I am bullish for this tech giant with a 52-week high of 190.70 there is plenty upside with the next resistance level around the 165.50 level. A pull back below 160 and between 154 and 150 may be possible.

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