Microsoft Corp.’s (MSFT, Financial) stellar run started at the end of 2012, and the company ended every year from 2012 to 2016 in the green.
2016 was a profitable year for the company as the stock surged approximately 12%. Over the past few quarters, the company’s revenue has been rising at a rapid rate.
Most recently, Microsoft shared strong second-quarter results. In the second quarter, the company reported earnings per share of 83 cents, beating estimates by 4 cents. On the other hand, revenue came in at $26.07 billion, easily exceeding the consensus estimate by $790 million.
As a matter of fact, among all the operating systems (OS) present today, Microsoft’s OS remains the leading contender in business computing. Moreover, the company’s efforts to become a leading player in the cloud market are driving sales growth and compensating slothful sales that are mainly due to enduring shift from PCs to smartphones.
The company also is incorporating its software across its gaming platform, search engine, etc., which could help it gain huge benefits from ongoing technological progress.
On the other hand, the company is now aggressively focusing on artificial intelligence (AI). One of the best examples is Microsoft’s Cortana which uses artificial intelligence to frequently upgrade and enhance its replies to user queries.
To intensify its AI efforts, the company recently acquired Maluuba, a startup dedicated on AI reinforcement learning as well as deep learning. The Montreal-based company accounts for one of the most exciting research labs for natural language understanding around the globe. Maluuba has been working on making PCs more intelligent and communicate more proficiently with humans.
Microsoft believes the acquisition will help it chase an immense goal in artificial intelligence, known as artificial general intelligence (AGI). Moving onward, the company is on its way to introducing an AI-based smart-home device. The device will be powered by Cortana voice-enabled AI platform and is intended to compete directly against similar products like Amazon (AMZN, Financial) Echo and Echo Dot.
Following the acquisition of Maluuba, the company recently made another significant acquisition of Simplygon, a Sweden-based company that focuses on 3D data-optimization technology that is mainly used in various 3D applications as well as video games.
Nowadays, virtual reality (VR) and augmented reality (AR) markets are gaining a lot of media attention, and Simplygon has been working to allow VR/AR experiences. Microsoft anticipates that the acquisition of Simplygon will boost its “3D For Everyone” vision and strategy, which was disclosed in October 2016.
Summing up
Although Microsoft has been moving upward at a steady rate in the past few years, it looks like the company still has more upside potential. The company’s recent acquisition of Maluuba and Simplygon will certainly fortify its position in the rapidly growing AI and AR/VR markets.
The stock currently trades at its all-time highs, and stockholders seeking to initiate a position in the company should wait for a better opportunity. However, existing stockholders should continue holding the stock as there is a lot more to come.
Disclosure: No position in the stocks mentioned in this article.
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