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Microsoft Stock: 2 Things Investors Should Know


Mar. 18 2020, Published 8:24 a.m. ET

Microsoft (NASDAQ:MSFT) started 2020 on a high note. The stock gained 7.6% in January and logged more than 18% in year-to-date gains by mid-February. However, the sell-off in recent weeks due to coronavirus fears wiped out all of the stock’s early gains.

Investors have sought to cut their exposure to stocks due to fears that the spreading coronavirus will lead to a recession. A recession would hit company earnings and put dividends and stock buyback programs at risk.

For investors interested in Microsoft stock, there’s a lot more to know beyond how the coronavirus impacts the stock.

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Bill Gates is optimistic about Microsoft stock

Last week, Bill Gates stepped down from Microsoft’s board of directors. Gates made the decision to give himself more time to focus on his philanthropic works. Gates co-founded Microsoft with Paul Allen in 1975 and took it public in 1986. He was the company’s CEO until 2000. He served as the company’s board chairman until 2014.

In a post announcing his exit from the board, Gates said that he’s optimistic about Microsoft’s progress. The stock rose more than 14% on March 13 to record its best day so far in 2020 after Gates revealed his optimism about the company’s future.

Gates’s exit comes at a time when Microsoft has worked to diversify its business. In addition to the company’s legacy Windows and Office software business, Microsoft is also one of the world’s top cloud companies. The company has been expanding its hardware business, which makes augmented reality headset, laptops, and smartphones.

Gates owns about 1.4% of Microsoft stock, which makes him one of the largest shareholders in the company, according to CNBC.

Pentagon wants to reassess its decision about the JEDI contract

In October last year, the Pentagon awarded the $10 billion JEDI cloud computing contract to Microsoft. Notably, Amazon (NASDAQ:AMZN) protested Microsoft’s JEDI contract win. The company argued that President Trump influenced the Pentagon’s decision to award the lucrative cloud contract to Microsoft. Now, the Pentagon wants to reconsider part of its decision to award the contract to Microsoft.

Microsoft fell more than 9.0% on the day news emerged about the Pentagon rethinking its JEDI contract award decision.

The JEDI contract was expected to boost Microsoft’s cloud business. Currently, the company lags Amazon in terms of cloud market share. Microsoft also needs the JEDI contract to stay ahead of Google, which is aggressively gunning for its market share.


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