Microsoft's Stock Surge: Time to Invest or Wait?

A Decade of Dominance

When Satya Nadella took the reins from Steve Ballmer as Microsoft’s (NASDAQ: MSFT) CEO on Feb. 4, 2014, many skeptics saw only a slow-growth tech giant. But, if you invested \(10,000 in Microsoft at the dawn of Nadella's leadership, today, your investment would be soaring to \)140,000, a dazzling leap, juxtaposed against the $38,000 return of an S&P 500 index investment.

Transforming into a Growth Powerhouse

Under Ballmer, Microsoft’s stagnation was palpable. It trailed Amazon (NASDAQ: AMZN), Google’s parent, Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), and Apple (NASDAQ: AAPL) in both the mobile and cloud arenas. Windows Phone’s struggle against rivals like iPhone was telling. However, Nadella’s “mobile first, cloud first” mantra sparked a revolutionary overhaul — Windows and Office transformed into cloud-centric services, Azure emerged as a formidable cloud infrastructure, and key productivity apps embraced iOS and Android.

The AI and Cloud Revolution

Microsoft’s aggressive ventures into mobile, cloud, and AI tech might have initially squeezed margins but ultimately led to stellar growth. Between fiscal 2015 and 2025, fiscal revenue soared with a 12% CAGR, and its EPS climbed with a 5% CAGR. In the ever-expanding cloud sphere, Azure stands prominently, trailing only Amazon Web Services (AWS), while Microsoft 365 dominates alongside Google Workspace.

Prospects for Continued Success

Analysts forecast revenue CAGRs of 15% and EPS CAGRs of 16% from fiscal 2025 to 2028, buoyed by cloud and AI advancements. Amidst competition with Amazon and Google, Microsoft’s reservoir of $94.6 billion in liquidity offers ample acquisition or share buyback opportunities, further bolstering EPS.

Should You Invest Now?

Despite a price-to-earnings ratio of 33, potentially elevated by the bright prospects for its cloud and AI ventures, Microsoft’s long-term investment value is compelling. While not on the Motley Fool’s top 10 stocks, this tech behemoth promises a robust annual average return, consistently overshadowing the S&P 500’s historical yield of 10%. Long-term investors might find herein sustained gains, aligning with their buy-and-hold strategies.

Consider the historic triumphs when Netflix joined the Motley Fool list in 2004, turning a \(1,000 investment into \)652,872. Similar opportunities may still lie on the horizon, offering game-changing returns.

According to The Globe and Mail, Microsoft’s potential for sustained growth, buoyed by its visionary leadership, is a beacon for discerning investors pondering their next move in a volatile market.