MICROSOFT - MSFT Stock Investing to Profit From AI Machine Learning
Companies / Microsoft Jun 27, 2019 - 02:49 PM GMTBy: Nadeem_Walayat
Where to invest to profit from the exponential machine intelligence mega-trend. I have ranked these stocks in in terms of risk vs reward and volatility. Do remember that when investing in the stock market that your capital is at risk. There are NO SURE BETS!
If you've not already done so then watch my following video from November 2016 which illustrates why everything will start to change exponentially by 2021.
Machine Intelligence has become a broad church that has fragmented or branched off into a myriad of sectors and the number keeps expanding every year. Many years ago I broke the machine intelligence mega-trend down into 9 key sectors that I have now further fragmented into 10 by basically adding Cyber Security as the following list illustrates, the 10 key machine mega-trend sectors to invest in.
For a primer on how to invest in AI Stocks then see my following recent video:
Top 10 AI Stocks
The stocks are ranked in order of priority. Also to further break down the list, I consider the first 5 stocks as PRIMARY i.e. the most important. The next 3 as of SECONDARY importance and finally 2 far more risky TERTIARY stocks.
The stocks analysis is being published in reverse order (10 to 1) as this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914
PRIMARY AI STOCKS
3. MICROSOFT - MSFT
Microsoft may have been a little slow off the mark to incorporate AI into it's business, but this Tek Giant has the history and the means to give Google and Amazon a run for their money. It's definitely a competitor to Google, and given its wide berth of interests it will likely beat Google in at least in some of AI applications such as in medical imaging interpretation. And it should not be forgotten that Microsoft like Google also has an AI driven search engine BING, and an ever expanding range of cloud services built on its existing desktop based businesses such as Office and Cortana.
Microsoft founded it's AI Research division in 2016 where one of the objectives is to develop a Microsoft based AI platform, tool kits and services for businesses,
Microsoft Financials
| Current Price | $118 | |
| Market Cap | $904bn | |
| Enterprise Value | $854bn | |
| Total Cash | $128bn | |
| Net Income | $16.5bn | |
| P/E Ratio | 27.36 | |
| Forward P/E | 23.68 | |
| Dividend Yield | 1.7% | |
| Sales Growth | 23.2% | |
| Price to Sales Ratio (lower better) | 6.98 | |
| Price to Cash Flow Ratio (lower better) | 17.51 | |
| PEG Ratio (lower better) | 1.89 | |
| Debt to Equity (lower better) | 97.37 | |
| Stock Price 3 Year Change | 136% | |
| Ratio to S&P | 355% |
Microsoft's financials are robust, even pays a dividend unlike most similar stocks, has a huge cash mountain apparently even larger than Google's, coupled with strong earnings growth.
Trend - Microsoft's trend has been surprisingly smooth and powerful these past 3 years, undoubtedly boosted by stock buy backs. Now I have been invested in Microsoft for 2 decades and for most of that time Microsoft tended to be a dead going nowhere stock, under performing the general market. Well something's clearly changed! The stock price is signaling that Microsoft, the Tech sleeping giant has suddenly woken up and that reason could very well be AI!
Long-term Investing - Like I said above, my experience is that Microsoft tends to UNDER PERFORM, but for some reason it's been on FIRE these past 3 years as illustrated by its performance against the S&P of 355%!
Conclusion - Microsoft appears to be going exponential! Which may be a sign that it is winning the AI war. It's hard to tell. For me this has been an invest and forget stock, where all of my holdings were accrued over 10 years ago. Microsoft should definitely play a part in an AI portfolio as long as people are aware that it has a tendency to go to sleep for many years.
Again this the whole of this analysis has first been made available to Patrons who support my work: https://www.patreon.com/posts/top-10-ai-stocks-25779914
So for immediate First Access to ALL of my analysis and trend forecasts then do consider becoming a Patron by supporting my work for just $3 per month. https://www.patreon.com/Nadeem_Walayat.
Your analyst
Nadeem Walayat
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 1000 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.
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