Most investors are keenly aware of the mayhem in the technology sector of late. Growth projections moving forward are being tested as questions of an impending recession loom and companies offering sky-high valuations are being hurt the most.
What is interesting about Microsoft Corporation (NASDAQ:MSFT) is the fact that this company has a higher valuation than some of its peers, among the largest technology companies in the world at the moment, partially negating my previous commentary. Some of this higher than average valuation can be due to the rather large moat the company boasts surrounding its business model (a monopoly of sorts in specific software niches) - some can be due to a very talented and experienced management team which is willing to continue to invest in new businesses.
Microsoft has recently announced an acquisition of GitHub for $7.5 billion U.S., a massive acquisition in the cloud space which will help propel Microsoft to near the front of the pack in and up and coming (and seemingly ultra-important) technology niche. This acquisition has shone the spotlight on Microsoft's team and its ability to continue to generate long-term income streams, something investors have been hoping for more clarity on for some time.
From a fundamental perspective, Microsoft remains one of the leaders in the U.S. tech space, warranting the firm’s current valuation. I expect to see further growth at Microsoft over the long run, despite the potential for short-term volatility should a recession take hold.
Invest wisely, my friends.
