While there was a rebound in Big Tech stocks this week, unfortunately Microsoft (NASDAQ: MSFT) wasn’t one of them. Shares of the Magnificent Seven stock dipped by 1.5% after the company came out with weak earnings.
Plus, there was a double whammy as Microsoft stock announced an outage that was triggered by a cyberattack. Talk about bad timing. Yet even so, could this mean now is a great time to invest in the stock long term?
What happened
First, the cyberattack. On July 30, 2024, a distributed denial of service (DDoS) cyberattack triggered a major outage affecting Microsoft’s Azure services, including Microsoft 365 products like Office and Outlook. The outage lasted nearly 10 hours and impacted companies such as U.K. bank NatWest.
Microsoft confirmed that the attack caused an “unexpected usage spike,” which led to performance issues with Azure Front Door and Azure Content Delivery Network components. Despite having DDoS protection mechanisms in place, an error in the implementation amplified the attack’s impact rather than mitigating it.
Earnings not much better
While since resolved, Microsoft stock came out with earnings for its fourth quarter and the full-year for 2024. Microsoft’s financial results for the fourth quarter of fiscal year 2024 showcase a robust performance.
The company reported revenue of US$64.7 billion, marking a 15% increase year-over-year, with a 16% rise in constant currency. Operating income also saw a 15% increase, reaching US$27.9 billion, while net income grew by 10% to US$22 billion. Diluted earnings per share stood at US$2.95, reflecting a 10% increase year-over-year.
For the fiscal year 2024, Microsoft reported total revenue of US$245.1 billion, a 16% increase year-over-year. Operating income reached US$109.4 billion, reflecting a 24% increase, and net income was US$88.1 billion, up 22%. Diluted earnings per share for the fiscal year were US$11.80, marking a 22% increase year-over-year.
Looking ahead
While earnings had a mixed impact, the company is clearly still looking ahead. And that future holds a lot of artificial intelligence (AI) spending. This significant investment in cloud and AI infrastructure is seen as a strategic move, aligning with the company’s long-term growth plans.
In fact, in the words of one analyst, the company’s spending on AI is “extremely positive” not just for Microsoft stock, but the “broader AI infrastructure universe.” With nearly all of its US$19 billion in spend going towards cloud and AI-related spending, it’s clear that this will remain a key focus going into 2025.
Should you buy?
Microsoft stock has always been one of the biggest companies to watch in the 21st century marketplace. And that doesn’t seem to be ending any time soon. Shares may be down 10% from 52-week highs, but I would see this as an opportunity.
In fact, the company has seen its share price surge by 206% in the last five years. That’s a compound annual growth rate (CAGR) of 25%! All in all, even with the recent blip in the market, I would consider now a great time to buy up Microsoft stock. You could easily see shares return to those heights, and move on from there for years to come.
