High tech stocks have been the drivers of the longest bull market in U.S. history. But, how long will the rally last and are any of the tech darlings buy and hold material? From the depths of the U.S. financial crisis and stock market collapse until now, stocks like Apple, Amazon, Microsoft, Alphabet (Google), and Facebook have been big winners. However, no market rally lasts forever. Fears of a permanent trade war with China, a 2020 recession, and FANG investment risks, are causing analysts to downgrade many of these companies. One venerable tech stock that still looks good and has recently been upgraded is Microsoft.
Is Microsoft a Buy and Hold Investment?
One stock that looks good to analysts of tech stocks is Microsoft. According Market Watch, Microsoft looks like the safest bet among the software giants.
Sky-high valuations for software stocks necessitate a more defensive view of the industry, according to Jefferies analyst Brent Thill, and Microsoft Corp. shares look like the “safest” bet.
He assumed coverage of the software industry late on Monday, upgrading Microsoft’s stock to buy from hold while moving to the sidelines on several other names, including Oracle Corp. ORCL, -0.22%
Microsoft MSFT, +0.36% seems like a smart way to play software due to its diversified business makeup and clear visibility into double-digit revenue growth going forward, Thill wrote. He sees numerous growth drivers for Microsoft, including its Azure, Office, and LinkedIn businesses, which give the company the “greatest exposure to [software-as-a-service] revenue among any of the major public cloud players.”
Computer chips are getting faster and faster and artificial intelligence is already in play. But, in order to make money from these technologies, you need to invest in a company that finds real-world uses. Microsoft got started by developing the operating system for the IBM PC and all other compatible computers. And, over the years they have moved into gaming hardware and software, touch-screen computers, cloud-based computing and an ever-wider range of applications. It is this ability to read the needs of the market and both develop and market more and more useful applications that will provide Microsoft’s income stream into the future. Their intrinsic stock value is such that they are a “buy” right now and will likely remain so into the indefinite future.
Investing in Stocks in the Computer Technology Sector
Warren Buffett has famously avoided investing in advanced tech. His concern is that you cannot predict who the winners will be five years from now because technology changes so rapidly. And, investors should note Buffett’s silent warning for investors which we described in an article about how he is holding cash right now.
In this regard, is Microsoft a buy and hold investment? However, Microsoft makes money by finding applications for technologies, making businesses run better, and making communication more efficient. These are services that people will pay for now and for a long time to come. The company is not necessarily where you want to put all of your money, but can easily be part of anyone’s portfolio of buy and hold stocks. And, if you like the idea of investing and not losing any money, Microsoft (along with Johnson & Johnson) has the only American AAA corporate bonds. Learn more about MSFT stock Nasdaq at this link.