Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Britehouse breaks free from NTT Data

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      The satellite broadband operators taking on Starlink

      9 July 2025

      Yaccarino out: Musk’s handpicked CEO quits X suddenly

      9 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025

      Grammarly acquires e-mail start-up Superhuman

      1 July 2025

      Apple considers ditching its own AI in Siri overhaul

      1 July 2025

      Jony Ive’s first AI gadget could be … a pen

      30 June 2025
    • In-depth

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025

      MultiChoice may unbundle SuperSport from DStv

      12 June 2025

      Grok promised bias-free chat. Then came the edits

      2 June 2025
    • TCS

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025

      TCS+ | First Distribution on the latest and greatest cloud technologies

      27 June 2025

      TCS+ | First Distribution on data governance in hybrid cloud environments

      27 June 2025
    • Opinion

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025

      Singapore soared – why can’t we? Lessons South Africa refuses to learn

      13 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Investment » Microsoft is still a favourite growth play for investors

    Microsoft is still a favourite growth play for investors

    By Agency Staff26 July 2022
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp

    In a world of sputtering growth for technology companies, some investors are gravitating towards Microsoft as the closest thing to a safe bet.

    The attractions those bulls see should be on display in the Redmond, Washington-based company’s fourth quarter results after the market close on Tuesday: Wall Street expects Microsoft will report earnings growth of 6% and a 14% increase in revenue, extending a years-long streak of double-digit sales expansion.

    While Microsoft hasn’t been immune to this year’s tech stock selloff, the company has a reputation for durable growth, thanks to business software and cloud computing offerings that analysts see as mission critical for corporations, making customers unlikely to drop them in a downturn. And the stock looks like more of a bargain than it did during the 2021 tech surge.

    For a gigacap like Microsoft to grow at a double-digit pace like this is pretty amazing

    “Within the sector it looks pretty strong, and the valuation is supported by real improvements in the fundamentals,” said Hal Reynolds, who oversees more than US$15-billion as chief investment officer at Los Angeles Capital Management. “That a name like this is now more attractively priced makes it easier to move back into the sector.”

    Microsoft shares have fallen 23% this year, a smaller drop than the Nasdaq 100 Index and the iShares Expanded Tech-Software Sector ETF. The stock now fetches 24 times estimated earnings, below its five-year average of 27.4.

    In early June, Microsoft pared its fourth quarter outlook, and the company also is slowing hiring in its security software and Azure cloud businesses, given weaker economic conditions.

    Analysts and investors have largely brushed these issues off, noting the lower outlook was credited to the impact of a stronger dollar, as opposed to weakening fundamentals, while the hiring slowdown will limit expenses. More than 90% of analysts recommend buying the stock, and it’s the second-highest-rated tech stock in the Nasdaq 100, after Crowdstrike Holdings.

    ‘Pulling the levers’

    The spending pullback shows the company is “pulling the levers it needs to pull in order to protect its earnings and margins”, said Matt Peron, director of research at Janus Henderson.

    While Wall Street remains largely positive on the long-term outlook for software in general, analysts have been lowering their expectations as they brace for a potential recession. Analysts predict software and services companies will report 2022 earnings growth of 13.6%, down from the 14.8% pace expected in late January, according to data compiled by Bloomberg Intelligence.

    The consensus view for Microsoft’s fourth quarter earnings have dropped by 2.9% over the past three months, while the consensus for revenue is down 0.6%. However, should revenue come in close to expectations, it would extend a streak of double-digit growth that began in 2017 — an impressive feat for the world’s third biggest company, with a market capitalisation of $1.9-trillion.

    “For a gigacap like Microsoft to grow at a double-digit pace like this is pretty amazing, especially since you’re paying a reasonable multiple for it,” said Janus Henderson’s Peron. “Why not have that at the core of your portfolio?”  — Ryan Vlastelica, (c) 2022 Bloomberg LP



    Microsoft
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleCentral African Republic’s digital coin flops at launch
    Next Article Pick n Pay reports doubling of online sales

    Related Posts

    AI gold rush propels Nvidia to record $4-trillion market cap

    9 July 2025

    Jony Ive’s first AI gadget could be … a pen

    30 June 2025

    Bridging the SQL expertise gap

    30 June 2025
    Company News

    Samsung unfolds the future with thinnest, lightest Galaxy Z Fold yet

    9 July 2025

    Huawei supercharges South African SMEs with over 20 new eKit products

    9 July 2025

    Webtonic cracks the talent code with AWS-powered TonicHub

    9 July 2025
    Opinion

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    South Africa pioneered drone laws a decade ago – now it must catch up

    17 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.