The Microsoft (MSFT) stock price is in a strong bullish momentum as more companies continue their shift to the cloud. The stock ended last week at $255, valuing the company at more than $1.6 trillion. The shares have surged by more than 56% in the past 12 months and by 18% this year. This makes it one of the best performers in the Dow Jones.
Microsoft firing on all cylinders
Microsoft stock price has done well, even as other tech companies have struggled lately. This is partly because of the strength of the Azure services, which has continued to do well as more companies shift to the cloud. Amazon’s AWS has done equally well. In the most recent quarter, Microsoft reported that its cloud revenue surged by more than 50%, with the commercial cloud run rate reaching more than $66 billion.
Microsoft’s other businesses have also done well. In 2020, its gaming revenue surged as more people stayed at home. Similarly, its other businesses like Microsoft Teams also added millions of users as more companies adapted to the work from home situation. Indeed, Teams have grown from a small platform to become the biggest threat to Slack (WORK).
And recently, Microsoft struck a major deal with the military. The company won a contract to supply virtual reality HoloLens to the military in a deal worth more than $22 billion in ten years. This deal came a few months after the Department of Defense (DoD) selected Microsoft to provide the Joint Enterprise Defense Infrastructure (JEDI) services. This contract was worth more than $10 billion.
Microsoft Nuance Communications
The Microsoft stock price is now reacting to some of the strategies the company is using to spend this windfall. A few weeks ago, it was reported that the company was looking to acquire Discord in a deal valued at about $10 billion. For starters, Discord is a platform that allows gamers and other people to communicate. Such an acquisition would help Microsoft to build its gaming business.
During the weekend, Bloomberg reported that Microsoft was considering buying Nuance Communications. The company is valued at more than $13 billion, but the company is considering paying $16 billion. Nuance provides artificial intelligence and speech solutions mostly to the healthcare sector. Its products are also used in other sectors like retail, finance, and telecommunication sectors.
Early this year, Microsoft spent $7.5 billion in its acquisition of Zenimax Media, a video developer that owns Bethesda Studios. Therefore, if Microsoft succeeds in buying Nuance, it will be its biggest deal ever since it acquired LinkedIn for $24 billion.
Analysts are generally optimistic about Microsoft. Furthermore, the company has become a market leader or contender in the most important industries like cloud computing, artificial intelligence, and gaming. Data compiled by Marketbeat shows that most analysts are bullish, with the average target being at $268. The most optimistic analysts are from Goldman Sachs, who expect the stock to rise to $315. Wedbush and Jefferies also see the stock rising to above $300.
Microsoft stock price analysis
The four-hour chart shows that the Microsoft stock price has surged recently. Last week, the stock managed to cross the important resistance level of $246, where it had struggled to move above before. The price also moved above the ascending channel that is shown in black and is above the 25-day and 15-day moving averages. Therefore, while the stock may experience a pullback, the overall trend remains bullish. In the near term, as we head towards the earning season, the stock could surge to $280.