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Why Microsoft Stock Rally Could Continue in 2017

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Jan. 31 2017, Updated 9:05 a.m. ET

Microsoft’s growth trajectory benefits its stock

Earlier in the series, we discussed Microsoft’s (MSFT) strategic acquisitions and partnerships that could help it grow and compete in the rapidly growing competitive cloud space. The market has rewarded Microsoft’s growth initiatives, which is evident by Microsoft stock’s upward trajectory. After recording two significant lows in 2016, one in mid-February and another in late June 2016, Microsoft stock reached an all-time high after breaking the threshold of $60 in late 2016. Microsoft’s better-than-expected fiscal 1Q17 earnings, which were dominated by growth in the cloud space, played a significant role in this peak.

In the last ten quarters, including fiscal 1Q17, Microsoft’s quarterly results have either managed to be in line with or beat analyst expectations on revenues and earnings, as the below chart shows.
analysts estimates

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Microsoft’s 2Q17 results expectations

Microsoft is scheduled to report its 2Q17 earnings on January 26, 2017. For fiscal 2Q16, Estimize, a financial estimate platform, expects Microsoft to report revenue of ~$25.2 billion and non-GAAP EPS (earnings per share) of $0.79.

In fiscal 1Q17, Microsoft reported revenues of $22.3 billion and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.76. Looking at its past trend and thirst for growth and diversification, Microsoft is likely to exceed analyst expectations with fiscal 2Q17 results. If Microsoft once again beats analysts’ expectations with its fiscal 2Q17 results, Microsoft could make history in 2017.

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