As Dow Drives Above 27,000, This Stock Is Leading It Higher
One stock has paced the Dow Jones industrials most of the year and is now the best-performing stock in the index for 2019. Microsoft shares are up almost 37% so far this year, while the Dow has seen a gain…
Those who thought that trade disputes, a slowing global economy and worries about interest rates would cap the value of the American stock markets have been proven wrong. The Dow Jones industrial average has broken another record, trading above 27,000 for the first time. It is worth remembering that it hit a Great Recession low near 6,547 roughly a decade ago.
One stock has paced the Dow most of the year and is now the best-performing stock in the index for 2019. Microsoft Corp. (NASDAQ: MSFT | MSFT Price Prediction) shares are up 36.75% so far this year to $138.90. The Dow is higher by 17.17% to 27,332.03. The comeback of the huge software company’s stock has been based on several factors that have allowed it to emerge from a period when the shares were largely ignored.
Started in 1975, Microsoft saw early success driven by its Windows operating system, which was used in almost every personal computer in the world. The company extended its revenue as Windows moved to become the key operating system to the growing number of the world’s servers. Along the way, it moved into the video game business via the Xbox. It also created one of the most widely used web browsers.
Microsoft’s dominance and revenue growth stalled a great deal under CEO Steve Ballmer. He left in 2014 and Satya Nadella replaced him. While Nadella has created a number of initiatives that have improved Microsoft’s fortunes, the most important is Microsoft’s foray into cloud computing. The cloud has become a primary component of many tech products and services around the world.
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The importance of the cloud in Microsoft’s financials shows up in its most recent quarterly earnings. The headline of the earnings release said, “Microsoft Cloud Strength Drives Third Quarter Results.” Overall revenue for the entire company rose 14% to $30.6 billion, compared to the same period the year before. Net income hit $8.8 billion, up 19%. Microsoft’s server products and cloud services revenue rose 27%. The key to the growth was the Microsoft core cloud product group, Azure. Azure revenue growth was 73% for the period.
Can the growth continue? After Microsoft announced its earnings, research firm Wedbush’s analyst Dan Ives wrote, “This quarter was an absolute ‘blow out quarter’ across the board with no blemishes and in our opinion speaks to an inflection point in deal flow as more enterprises pick Redmond for the cloud.” Many other analysts echo this sentiment.
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Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.
McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.
His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.
A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
