Microsoft Stock Analysis

Company Overview:

Microsoft Corporation is an American multinational technology corporation headquartered in Redmond, Washington. It was founded on April 4, 1975 by Bill Gates and Paul Allen and overtime dominated personal computer operating systems. Today Microsoft is highly known for its software products such as Windows line operating system, Microsoft office suite, cloud systems, and its web browser internet explorer. Microsoft continues to be an inspiration for creative innovation and leader in the technological space.

Stock Timeline Analysis:

One aspect about the stock market that I find fascinating is its relationships between assets prices and economic conditions. Over the last 3 years we have seen major events that have impacted not only the US economy but the entire world. The big tech giant Microsoft and its stock price display those effects sublimely alongside showcasing the impressive capabilities of artificial intelligence. A brief timeline walk through will be given using Microsoft stock as our guide.

We begin in 2019 when Microsoft provided a 1-billion-dollar investment into OpenAI, an American Artificial Intelligence research laboratory with a non-profit board. The funding for OpenAI was always murky, with Elon Musk being a top funder then later resigning his board seat to invade a future conflict of interest with his role as CEO of Tesla, an innovator of AI development for self-driving cars. Microsoft investment into OpenAI back in 2019 will play a pivotal role for the company in the coming years and return back. Now entering March 2020 and the entire world was taken by a storm with the spread of Covid-19 which caused the shutdown of countries. In cause of panic the stock market quickly started selling off which can be observed in the stock price above but note most companies’ shares were also affected similarly. The U.S. Federal Reserve responded by changing the economic monetary policy to Quantitative Easing, which introduced new money into the money supply by a central bank. In shorthand the central bank purchases predetermined amounts of government bonds or other financial assets in order to stimulate economic activity. This state of policy helped relieve Americans during times of high unemployment, stimulus checks, and business loans but inevitably lasted too long for about 2 years. View the stock market price grow with no set backs as the increase in money supply was injected back into the stocks making it reach unprecedented top levels. However, the price everyone will pay later started to become a concern as the inflation rate rose to about 6.8% between November 2020 and November 2021. Despite the increase in inflation between that time frame Jerome Powell who is the chairman of the Board of Governors of the Federal Reserve System and its members still continued to print money ignoring the fact this will only make inflation worse.

Not until the beginning of 2022 when several government officials and politicians coincidentally started selling their investment portfolios which must have been initiated from news that monetary policy will again be changed but this time to Quantitative Tightening. Some say insider trading was being involved however, it was time to combat the issue of rising prices to all essential items in which people depend on to survive. Observe the stock price make a turnaround as news and fear start to spread into the market causing other investors to also sell their portfolios as everyone knew the time of blindly investing and making a profitable return was over. By the end of February 2022, Russia then Invades Ukraine during a so-called military exercise along its borders also making situations of energy prices worse. Now during the Quantitative Tightening phase or also known as the normalization of the balance sheet, is a tool applied by the central banks to decrease the amount of liquidity or money supply in the economy. As the S&P 500 stock continues the down trend, an index that includes 500 of the largest companies and of course Microsoft being a contributor follows the same path. Around September 2022, the United States reached its peak inflation rate at 9.1% implying in just over 10 years everything in price will double. Now you can see why the Federal Reserve main concern is to bring Inflation down by all means necessary even if it means risking a recession.

In a surprising event in early November 2022, caught the attention of the not only the AI community but everyone, Microsoft announced a new A.I. powered Bing homepage that you can use to chat with. The update allowed you to chat with it to get enhanced detailed answers to search queries in the Bing web browser. At the time no one knew but behind the scenes it was being powered by Chat-GPT4 while OpenAI barely releases Chat-GPT3 to the public at the end of November 2022. The new technology which lit up the internet caught investors eyes and cause them to invest into Microsoft despite the country economic situation. You can view the stock price make a shift and start rising deeming its investment into OpenAI back in 2019 a chess player move. This particular investment provided Microsoft access to some of the most popular and advanced artificial intelligence systems and only encouraged them to invest another $10 billion into OpenAI in early January 2023. Many criticized OpenAI including Elon Musk, stating its initial purpose of being a non-profit organization was removed by Microsoft but some argue that OpenAI needs Microsoft funding and cloud computing power to crunch massive volumes of data and run its complex models.

On the other side Google, which is one of Microsoft’s biggest competitors took a big hit into its shares as many were saying it was the end of the reign of the infamous Google search engine. Google then learned that smartphone maker Samsung was considering ditching Google’s technology in favor of Bing as a default search engine. Even the CEO Sundar Pichai, of Google didn’t even know how to respond and led him to ask for advice from the originators of Google. The only reasonable response for Google was to hurry and add A.I. to its own search engine which was later named Bard. Now is this the start of the A.I. wars or did it begin long ago? Will A.I. technology create new jobs in the market and save our Economy from a recession? Only time will tell.

Note: Stock prices are influenced by a multitude of factors and the ones mentioned here could have or could have not contributed to specific price changes. I am not a financial advisor and this article was intended for educational purposes. It was written for those who are into investing and love technology. Overall, I’m just a guy who keeps up with the latest news and trends by reading constantly. Hope this article provided you with some new information or inspired you to learn more.

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