Microsoft is a “great, great” stock to own, this fund manager says

“We see a long, long runway of growth for Microsoft,” says Jamie Murray of the Murray Wealth Group, who gave his take on the stock to BNN Bloomberg on Friday, saying Microsoft (Microsoft Stock Quote, Chart, News NASDAQ:MSFT) is positioned perfectly to benefit from pandemic-inspired shifts to the workplace.

There have been a few obvious choices for investors looking to match up their stock picks with the drastic changes to lifestyles brought about by COVID-19 and social distancing. People are staying home and not only watching more TV but buying more products online, hence the recent rise in share price for names like Amazon and Netflix.

But as far as changes go to the way we work, Microsoft is the stock to own, says Murray, who sees the company as a prime supporter of remote work environments.

“Microsoft is enabling the digital world, and all of their business lines are firing all cylinders, save for some of their hardware and server lines that have been impacted by some supply disruptions in China and some ongoing demand issues,” said Murray, portfolio manager for Murray Wealth.

“But you have their Azure cloud services division growing by 61 per cent last quarter and that’s only going to accelerate coming out of this crisis and potentially even through it as more and more companies move to work-from-home and more and more companies moved to cloud-based and app-based services for their customers,” Murray added.

Microsoft fell with the rest of the market starting in late February, losing almost 28 per cent at its lowest point over the first four weeks of the pullback, but the stock has now gained all of that back. MSFT is now up 13 per cent year-to-date, while last year it finished up 55 per cent.

Last month, Microsoft revealed it had seen a 775-per-cent surge in use of its collaboration platform Microsoft Teams in Italy, a definite sign that remote workspaces during the pandemic lockdown are relying more heavily on software such as Teams.

Microsoft last reported its quarterly results in January where its fiscal second quarter 2020 showed revenue up 14 per cent to $36.9 billion and net income up a sparkling 38 per cent to $11.6 billion.

Azure’s growth of 62 per cent was greater than analysts had expected, even as it was a slower growth rate than a year ago at 76 per cent.

MSFT’s More Personal Computing segment grew as well but was up just 1.6 per cent from a year earlier to $13.21 billion in revenue. That segment includes hardware such as Xbox, which saw sales drop by 43 per cent, as consumers are now waiting on the next iteration, Xbox Series X due out later this year.

Murray said Xbox is another ace in the hole for Microsoft.

“Xbox, there’s a bright future in video gaming and they’re really in that duopoly right now with PlayStation on that front,” Murray says. “And finally, your LinkedIn social network for professional worlds, and then tie it all into Microsoft Office 365.”

“A great, great company to own,” he says.