How To Buy Microsoft (MSFT) Stock

SHORT ANSWER: You can buy MSFT stock with Interactive Brokers as your online broker.

Microsoft is a giant in the tech sector with a 40+ year history of innovation. Chances are, you’ve used a Microsoft product at some point in the last year and might even be reading this article on one now.

Born in a Washington garage, the company was formed by college-age programmers Bill Gates and Paul Allen and now has multiple successful products for use in dozens of tech niches. The garage-born company surpassed $1 trillion in market cap at the start of the year. Can anything derail this stock?

How to Buy Microsoft Stock

If you're interested in purchasing MSFT stock but unsure where to begin, here is a simplified guide on how to get started.

Where to Buy Stocks

Benzinga has compiled a list of the best online brokerage platforms where you can purchase shares of MSFT stock.

What is Microsoft?

Back in 1975, Bill Gates had an idea. His childhood friend Paul Allen had just shown him an issue of Popular Mechanics containing an article about one of the first personal computers. The two had repeatedly discussed how the future would see computers in homes and businesses across the country and this article presented a unique opportunity.

Gates and Allen went on to develop a BASIC interpreter program for the machine mentioned in the magazine. The interpreter was well-received and the pair got the okay to distribute.

Allen suggested they name their new business “Micro-Soft” and Gates became the first CEO on April 4. Microsoft branched out to design the MS-DOS operating system in 1980, which became the company’s first major hit following a deal with IBM. MS-DOS was the prevailing operating system on most personal computers throughout the 80s. From MS-DOS came Microsoft Windows in 1985, an operating system still used by millions of people today (albeit far more advanced versions).

Microsoft Office followed in 1990, a productivity suite with useful workplace programs like Word, Excel, and Powerpoint. By 2001, the company had products in both the computer hardware and software lines and decided to enter new territory: console video games. The new Microsoft Xbox competed directly with video game giants Sony and Nintendo, eventually taking significant market share from both. Today, Microsoft has their hand in many of the tech sector’s products. They still make and sell Office and Windows, but now the firm also distributes or manages:

• Smartphones and tablets
• Data security
• Internet search and browsing
• Email systems
• Online gaming platforms
• Gaming consoles
• AI
• Cloud computing
• Social networking

History of Microsoft Stock

Microsoft went public on March 13, 1986 after a decade of successful ventures in the burgeoning computer industry. The price was $21 per share and the company raised $61 million from the initial offering. Remember, however, that the company has changed quite a bit in the intervening years.

Investors were eager to get their hands on such a popular name and the stock price climbed continuous throughout the 1990s and early 2000. During this 10-year timeframe, the company stock split eight different times, including a 2-1 split in 1999 right before the dot-com bubble popped. Like most tech companies, the dot-com bubble hit Microsoft hard and the stock price failed to make new highs for over fifteen years. A final stock split occurred in 2003, but the company traded in a flat range for a long time.

The Great Recession took Microsoft shares down to levels not seen since 1997 and the rebound many stocks got in 2009 failed to materialize for them. However, the rebound wasn’t absent, only delayed. Microsoft stock caught fire in 2014 and the company pushed upward, finally breaking its split-adjusted all-time high at the end of 2016.

Since 2020, the MSFT stock has shown a strong performance, steadily increasing in value due to various factors. Despite the initial market downturn caused by the COVID-19 pandemic in early 2020, Microsoft's stock quickly rebounded as the company successfully capitalized on the shift towards remote work and digital services.

Throughout 2020 and into 2021, Microsoft continued to release innovative products and services like the launch of the Xbox Series X/S gaming consoles and the growth of their cloud computing division, Azure. Major events such as the acquisition of ZeniMax Media, which added popular game titles under Bethesda Softworks to Microsoft's gaming portfolio also positively impacted the stock.

Pros of Owning Microsoft Stock

Proponents of Microsoft stock think the company still has room to climb thanks to the following reasons.

Multiple Revenue Streams

Microsoft is involved in so much more than just PCs now. The Azure cloud computing system is a big seller and the company recently acquired programmer networking site GitHub.  And don’t forget, they still sell Windows, Office, and Xboxes too.

Strong Leadership

Satya Nadella took over the CEO position from Steve Ballmer in 2014 and immediately began reshaping the company for the modern age. Nadella expanded the company’s reach into cloud computing and AI while also working to form a responsible corporate culture. He’s got a different vision than Bill Gates is and willing to cooperate with competitors to further his goals for the company.

No Signs of Slowing Down 

Microsoft celebrated its 49th birthday back in April, but the company doesn’t appear to be long in the tooth. They’ve jumped right into the AI race and have built a formidable offering in the cloud computing space. Microsoft has a history of adapting and should never be counted out, especially with the forward-thinking CEO.

Cons of Owning Microsoft Stock

Considering adding shares of Microsoft to your portfolio? Make sure you consider these potential downsides before buying.

Overly Reliant on PCs 

Microsoft may have a diverse product catalogue, but Windows is one of their big sellers and the future of the PC market is cloudy at best. Windows needs to be renovated for the mobile age to continue being successful.

Smart Competitors 

Microsoft isn’t just going toe-to-toe with Apple anymore. Companies like Google, Amazon, Oracle, Salesforce and Sony all thrive in the spaces Microsoft is entering and there will be constant pressure to innovate. For example, competitors like Apple build devices that can completely replace PCs, offering the same functionality and chipping away at the exclusivity of the “PC” brand as a whole. How does this impact Microsoft? Corporate laptop and PC sales drop because workers often use their own devices (which may not be PCs).

Potential the Stock Might be Overbought 

MSFT stock sports a P/E ratio over 34.3. Could a slowdown becoming? How much bigger can a $3.08 trillion company get?

Buying the MSFT Stock

Investing in Microsoft stock can be a lucrative opportunity for both seasoned investors and beginners alike. By following the steps outlined above, you can make informed decisions and potentially see significant returns on your investment. With Microsoft's strong financial performance, innovative products and continued growth in the tech industry, buying Microsoft stock may be a smart move for your investment portfolio. Remember to always do thorough research, consult with financial advisors if needed and stay informed on market trends to make the most of your investment in Microsoft.

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