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Should You Consider Microsoft Stock in 2019?

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Jan. 16 2019, Updated 12:22 p.m. ET

One of the top software stocks to own in 2019

2019 has started on a very positive note for Microsoft (MSFT), a leading player in the enterprise software space. Earlier this week, it secured a multi-billion-dollar contract of $17.6 billion with the US Department of Defense. According to the department’s website, under this contract, Microsoft Enterprise Services will provide services to the department, the Coast Guard, and the intelligence community.

With an overall bullish outlook on the software sector (IYW), Morgan Stanley chose the company’s stock as one of the top software stocks to hold in 2019. Currently, the research firm has an “overweight” rating on the stock.

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What analysts say

Keith Weiss, an analyst with Morgan Stanley (MS), has increased his price target for Microsoft stock by $10 to $140. Currently, the technology giant’s stock is trading at $105.0, which implies a potential for significant appreciation in MSFT’s stock price.

In a research note by Bloomberg, Weiss explained the catalysts for Microsoft’s positioning in the software space. He said, “As the IT conversation shifts from pure Public Cloud towards Hybrid Cloud architectures involving enterprises utilizing a mix of on-premise and public cloud resources Microsoft pulls ahead as the best secularly position firm in tech.”

Microsoft, a dominant player in the cloud market

According to Synergy Research, and as the presentation above shows, the cloud, IaaS (Infrastructure-as-a-service), and PaaS (Platform-as-a-service) spaces were dominated by Amazon (AMZN), Microsoft, and Google (GOOG). IBM (IBM) retained its leadership in the hosted private cloud space.

According to the report, “Across the whole cloud ecosystem, companies that featured the most prominent among the 2018 market segment leaders were Microsoft, Amazon/AWS, Dell EMC, and IBM. They were followed by Salesforce, Cisco, HPE, Adobe, and VMware. In aggregate these nine accounted for well over half of all cloud-related revenues.”

Though Amazon is viewed as the leader in the cloud space, Microsoft’s rapid pace comes in ahead of its peers in the consolidated and competitive cloud space.

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