Microsoft Stock Price Guide: What Drives MSFT Price?

Microsoft (MSFT) stands as a cornerstone of the American tech industry, with its products and innovations reaching a global audience over the last fifty years. In this article, we'll explore some of the key milestones Microsoft has reached along its journey to business success, as well as the factors that affect its share price, and how to capture its price movements via CFD trading.

TL;DR

• Microsoft's Origins and Evolution: Founded in Seattle, Washington, Microsoft started with BASIC interpreters for the Altair 8800 and has since become a leader in software, hardware, and services, including Windows, Microsoft 365, Azure, and Xbox.


• IPO and Market Capitalization Growth: Microsoft's IPO in 1986 was a pivotal moment in the company’s history, creating significant wealth for employees. Under CEO Satya Nadella since 2014, the company focused on cloud computing, leading to Azure's growth and reaching a trillion-dollar market cap by 2018.


• Market Cap Milestones: Microsoft's market cap has seen a steady upward trend over the past 25 years, despite economic challenges, growing from $322.9 billion in 1998 to over $3 trillion in 2024.


• Stock Splits and Trading: Microsoft's history of nine stock splits has made its shares more accessible. The company continues to trade on the Nasdaq, with extended hours available through some brokers, and the share price is influenced by product launches, earnings reports, macroeconomic conditions, competition, and regulatory factors.

What Is Microsoft?

Microsoft is headquartered in Redmond, WA. Starting with interpreters of BASIC, a computer coding language created in the 1960’s, for the Altair 8800, Microsoft transformed personal computing. Today, it's known for a wide range of software, hardware, and services for consumers and businesses. Key products include Windows operating systems, Microsoft 365 (Word, Excel), Azure cloud platform, and Xbox gaming consoles.

The company's IPO in 1986 was a major milestone, creating significant wealth for employees. Under CEO Satya Nadella since 2014, Microsoft shifted focus to cloud computing, leading to Azure's rapid growth. By 2018, Microsoft reached a trillion-dollar market capitalisation. As of 2024, it continues to invest in AI and cybersecurity, maintaining its status as a tech industry leader.

Microsoft Market Cap Milestones

In the past quarter-century, Microsoft’s has increased by a factor of more than ten times, bringing into focus its increasingly central market position in the American tech field. Below are a few milestones Microsoft reached on its journey to its status today as a multi-trillion dollar company:

• 1/12/1998: $322.9 billion


• 6/10/2000: $297.5 billion


• 2/10/2002: $245.4 billion


• 23/2/2009: $153 billion


• 20/3/2017: $501 billion


• 19/6/2019: $1.03 trillion


• 22/11/2021: $2.55 trillion


• 3/11/2022: $1.59 trillion


• 28/6/2024: $3.32 trillion

As can be inferred from the data points above, Microsoft's market capitalisation has been on a steady upward trend for most of the 21st century so far. Despite sharp decreases that may have been related to economic factors such as the early 2000’s dot-com bust, the ‘Great Recession’ of 2008-2009, and the economic travails of the COVID-19 pandemic years, Microsoft has succeeded in multiplying its market capitalisation value many times over, to ultimately become one of the largest firms operating on the American and global markets.

Stock Splits & Microsoft: A History

Microsoft's stock has experienced significant growth since its IPO, with one of the key possible factors in 2024 being investors' continued enthusiasm for AI-related stock. This surge has pushed its share price over $450 as of June 25th, 2024, making it harder for individual investors to accumulate shares. To address this, Microsoft may currently be considering a stock split, a common practice that benefits both investors and employees.

A high share price can be a barrier for investors wanting to buy full shares and for employees who receive stock as part of their compensation. Stock splits reduce the share price, making it more accessible to buy and sell shares. Microsoft has a history of stock splits, with nine splits from the late 1980s to the early 2000s. The company split its stock 2-for-1 on February 18, 2003; March 29, 1999; February 23, 1998; December 9, 1996; May 23, 1994; and April 16, 1990. Additionally, there were 3-for-2 splits on June 15, 1992, and June 27, 1991, as well as a 2-for-1 split on September 21, 1987. A share purchased before the 1987 split would be equivalent to 288 shares in June 2024.

While as of 2024 it had been more than two decades since the last time Microsoft's executive suite moved to split the firm's stock, the rise of Azure and cloud computing in 2010 and AI advancements of the early 2020’s could lead toward further growth in share value. If Microsoft implements another stock split, becoming a part-owner of the renowned firm could become more accessible to non-institutional investors and traders with relatively less capital alike.

What Are Microsoft’s Trading Hours?

Retail investors can usually trade Microsoft stock during regular market hours, from Monday to Friday, 9:30 AM to 4:00 PM Eastern Time (1:30 PM to 8:00 PM GMT).

Additionally, some brokers and exchanges, like the Nasdaq (US-TECH 100) stock exchange, offer extended trading hours. This includes pre-market trading from 4:00 AM to 9:30 AM ET (8:00 AM to 1:30 PM GMT) and after-hours trading from 4:00 PM to 8:00 PM ET (8:00 PM to midnight GMT).

Please note that CFD trading hours on the Plus500 trading platform may vary.

What Factors Can Impact Microsoft Share CFD Prices?

Understanding Microsoft's share price involves considering various fundamental factors that influence its value, which can differ between traditional shares and share CFDs, despite their interrelatedness.

Traditional shares of Microsoft reflect ownership in the company, entitling holders to dividends and voting rights at shareholder meetings. These shares are directly impacted by events like product launches, such as updates to Windows, Office 365, Azure services, and Xbox consoles. Positive reception or disappointment from consumers and media can significantly affect sentiment and thus share prices. Quarterly earnings reports are crucial too, revealing sales, profits, and earnings per share against market expectations. Deviations can prompt price movements as investors adjust their outlooks based on financial performance.

Macroeconomic conditions also play a pivotal role. Economic downturns, for instance, may reduce IT spending by businesses, impacting Microsoft's cloud services and enterprise software segments. Competition is another critical factor. Competitors’ moves in cloud computing services, gaming, and operating systems can alter market dynamics, influencing Microsoft's market position and share price. Strategic moves, like the acquisition of GitHub in 2018, can expand Microsoft's capabilities and market share, reshaping investor perceptions and trading decisions.

Moreover, regulatory factors like antitrust investigations and policy changes can impact Microsoft's operations and growth strategies, influencing share prices beyond the company's operational dynamics.

In contrast, share CFDs allow traders to speculate on price movements without owning the underlying shares. CFDs derive their value from Microsoft's stock price but do not provide ownership rights or dividends. Despite this distinction, CFD prices are influenced by the same fundamental factors affecting traditional shares, such as product launches, earnings reports, macroeconomic conditions, competition, and regulatory developments.

Understanding these dynamics helps traders navigate the complexities of Microsoft's stock and CFD markets, making use of these insights while crafting their personal strategies, all the while taking stock of the significant potential risk inherent in CFD trading.

Microsoft Stock Price Predictions

Microsoft, as of June 2024 the world's most valuable company with a market cap of $3.33 trillion, faces high expectations for future growth. Despite its colossal size, there remains optimism that Microsoft could continue breaking records and become the company to hit $5T in market cap by the late 2020’s.

The path to a $5 trillion market cap would require Microsoft's stock to appreciate by approximately 50%. While this may seem ambitious, the company's recent successes and its strategic focus on generative AI present compelling growth opportunities. This technology is expected to drive substantial advancements across Microsoft's enterprise software and cloud computing divisions, potentially maintaining elevated growth levels and justifying its premium valuation.

Investors should note that Microsoft's forward price-to-earnings (P/E) ratio stood at 38 as of June 2024, indicating a high valuation relative to its earnings potential. However, this figure may yet be sustainable over the near- to medium-term, given the transformative impact of AI and the company's expanding cybersecurity segment, identified as another significant growth driver.

While achieving a $5 trillion market cap would require significant earnings growth beyond current estimates, which forecast around 20% for FY2025, analysts foresee potential catalysts that could propel Microsoft further in the subsequent fiscal years. This includes not only AI innovations but also advancements in cybersecurity, highlighting diverse revenue streams that could support sustained upward momentum.

Moreover, even if Microsoft falls short of reaching a $5 trillion valuation in the near term, its stock still holds appeal for investors seeking steady upside potential. The company's forward dividend yield of 0.67% adds to total returns, complementing potential capital gains.

In conclusion, whether viewed as a speculative bet on Microsoft's future as a $5 trillion giant or as a stable component of a diversified portfolio, Microsoft stock appears to be in a strong position with regard to the potential for further growth. Its leadership in AI and robust growth prospects across key sectors seem to be continuing to attract investor interest, which may impact the value of Microsoft share CFDs as well.

Conclusion

In conclusion, Microsoft is a strong contender for future growth. Its leadership in AI and the expansion of its cybersecurity segment highlight the diverse revenue streams supporting sustained upward momentum.

While the path to such a high valuation requires significant growth, Microsoft’s strategic initiatives and robust market position seem to bode well for its future. Investors can benefit from both traditional shares and share CFDs, with each influenced by some common fundamental factors. However the cards fall in the end for Microsoft, you can gain exposure to its share price’s ups and downs via CFD trading on our Plus500 platform.

FAQs

Where are Microsoft shares listed?

Microsoft shares are listed on the Nasdaq Stock Market under the ticker symbol MSFT.

What is Microsoft IPO date and price?

Microsoft's IPO date was March 13, 1986, and the initial price was $21.00 per share.

Does Microsoft distribute dividends?

Yes, as of June 2024, Microsoft distributes dividends to its shareholders, with a current forward dividend yield of 0.67%.

How can I trade Microsoft shares?

Microsoft shares can be traded during regular market hours on the Nasdaq, with some brokers offering extended trading hours, and via CFDs.

Who are Microsoft's top shareholders?

As of June 2024, Microsoft's top shareholders include large institutional investors such as BlackRock (BLK) as well as individual investors among the firm’s top brass like Satya Nadella and Bradford Smith.

Who are Microsoft's main competitors?

As of June 2024, Microsoft's main competitors include Apple (AAPL), Amazon (AMZN), Alphabet (GOOG), and Nvidia (NVDA).

How many shares of Microsoft are available for trading?

Microsoft has approximately 7.45 billion shares available for trading as of June 2024.