What is Microsoft
Microsoft is the world's biggest software corporation and also engages in the development and support of services, devices, and solutions. People also include it in the Big Five US technology companies, alongside Google, Microsoft, Amazon, and Facebook.
Microsoft’s best-known software products are Microsoft Windows operating systems, Microsoft Office Suite, and the Internet Explorer and Edge web browsers. On the hardware side of things, Microsoft’s flagship products are the Xbox game consoles and the Microsoft Surface lineup of touchscreen personal computers.
Productivity and Business Processes, Intelligent Cloud, and More Personal Computing are the company's main three business segments. The Productivity and Business Processes section includes the company's productivity, communication, and information services portfolio, which spans a wide range of devices and platforms. The Intelligent Cloud division includes the company's public, private, and hybrid cloud technologies and services that can power modern businesses. Across all platforms, the More Personal Computing area includes goods and services oriented toward the needs of end-users, developers, and IT professionals.
Microsoft is also a publicly-traded company, making its stock available to anyone of legal age interested in purchasing shares.
Microsoft is a publicly traded company, making its stock available to anyone of legal age interested in purchasing shares.
What are Microsoft Shares (MSFT)
Microsoft shares represent a unit of ownership in Microsoft Corporation – and they are among the world’s most popular financial instruments. Microsoft shares will rise and fall in value according to how well the company is performing at a given moment in time. Better-than-expected earnings will make Microsoft share prices rise, while weaker earnings will make share prices fall. However, there are many reasons why a company's share price can change.
People trade Microsoft shares because, just like other financial instruments, they can be an opportunity to invest money. At a basic level, you can take a position on Microsoft shares to get exposure to economic growth. If an economy is in good shape, you might find that companies operating in that specific economic branch or industry will grow too.
Company growth is correlated with share price increases, which is what people are hoping for when they buy Microsoft shares.
Microsoft had its IPO on Mar. 13, 1986. The original trading price was $21. The stock split nine times over the years, with two of those being 3-for-2 splits. If you had bought just one share of Microsoft at the IPO, you would now have 288 shares after all the splits. Those shares would be worth $44,505 at the current Microsoft quote of $154.53. That's a compound annual return of about 25% per year or a cumulative return of nearly 211,000%. (source: Yahoo Finance).
Microsoft has become the largest tech company in the world and its stock has proved to be an excellent long-term investment for many shareholders.
Microsoft stock is traded on the Nasdaq stock exchange under the MSFT ticker.
If all that makes you want in on Microsoft’s IT growth, here is everything you need to know to buy Microsoft stock & shares to invest in MSFT.
How to Buy Microsoft Shares
Learning how to buy shares may not sound complicated, but you will need to do some research — and learn the basics — before making your first investment.
- Learn the difference between investing and trading
- Review Microsoft’s performance and outlook 2022
- Understand the risks and charges
- Choose your trading platform and place your orders
- Stay up to date with the latest news and rumors about Microsoft
1. Learn the difference between investing and trading
People have two options to buy shares of stock online. Firstly, they can buy shares in companies on the exchanges where they are listed. For instance, you can buy Microsoft stock on the NASDAQ exchange, so you own a share in the company (investor). Alternatively, they can buy Microsoft shares without owning them, speculating on the price of the underlying asset (trader).
Investing and trading are similar terms that some people will sometimes use interchangeably – but there are significant differences for you to be aware of.
Investing in Microsoft Stock
Investors buy Microsoft shares hoping their price will rise and they can sell them later for a profit, adhering to the basic principle of buying low and selling high. Investors will take positions over a longer period, attempting to profit from share price changes as well as dividend payments.
While this means that they might need more initial capital to get started when compared to trading, their losses would be capped at this initial price tag. That said, investors should be aware they might get back less returns than they initially invested.
Investors will buy Microsoft shares to:
- Make a profit from the Microsoft share price rising
- Receive an income from dividends if the company pays them
- Benefit from the effects of compounding
This last point requires investors to hold onto their shares for an extended period. That’s why you’ll sometimes hear the phrase ‘”time in the markets is better than timing the markets” when talking about share investments.
>> Learn how to invest in stocks for beginners
Microsoft (or any single stock, for that matter) can be a very volatile investment. You can lower the risk by diversifying your investment holdings.
An index fund is a type of mutual fund or exchange-traded fund (ETF) with a portfolio constructed to match or track the components of a financial market index, such as the Standard & Poor's 500 Index (S&P 500). An index mutual fund provides a broad market exposure, low operating expenses, and low portfolio turnover. These funds follow their benchmark index regardless of the state of the markets.
MSFT makes up about 5.9% of the S&P 500 stock index, meaning 5.9% of each dollar you invest in an S&P 500 index goes to Microsoft, and about 5.74% of Dow Jones Industrial Average. If you want an index with an even larger MSFT representation, you might consider investing in a Nasdaq index fund, where Microsoft accounts for 10% of holdings.
Technology exchange-traded funds (ETFs) provide exposure to the performance of companies within the global automobile industry.
MSFT makes up 20.70% of XLK (Technology Select Sector SPDR Fund), 17.8% of TECL (Direxion Daily Technology Bull 3X Shares), 17.2% of IYW (iShares U.S. Technology ETF), 16.7% of FTEC (Fidelity MSCI Information Technology Index ETF ), 16.4% of VGT (Vanguard Information Technology ETF).
>> Learn what ETFs are and how do they work
Trading Microsoft CFDs
On the other hand, traders might seek to capitalize on short-term share price gains. Rather than investing in the shares, traders speculate on the shares’ value. They can speculate on it rising by going long, as well as falling by going short.
Trading Microsoft stock means that you are speculating on a share’s price movements with derivatives like CFDs. In other words, you are purchasing Microsoft shares without taking direct ownership.
Leverage is available when you use this product, giving you full market exposure for an initial deposit – known as margin – to open your position.
For example, with leverage of 1:5, a trader who wanted to buy 100 Microsoft CFDs at $307 per share would only require $6,140 of trading capital, thereby leaving the remaining $30,693 available for additional trades.
But keep in mind that leverage can increase both your profits and your losses as they will be based on the full exposure of the trade, not just the margin requirement needed to open it. This means losses, as well as profits, could far exceed your margin.
With CFDs, you can ‘buy’ (go long) the shares if you think the Microsoft stock’s price will rise, or you can ‘sell’ (go short) if you think the Microsoft stock’s price will fall.
>> Learn what is CFD trading and how it works
Going Long Microsoft CFD
Microsoft has a sell price of $306.27 and a buy price of $307. Microsoft’s next earnings announcement is fast approaching, and you expect it to be good news. You think the company’s share price will go up, so you buy 200 Microsoft CFDs at $307.00. This is the equivalent of buying 200 Microsoft shares.
Because you can use leverage, you do not need to put up the full value of Microsoft shares. Instead, you only need to cover the margin, calculated by multiplying your exposure with the margin factor for the market you are trading.
So, if Microsoft has a margin factor of 20%, your margin would be 20% of the total exposure of your trade (200 share CFDs x $307 = $61.400), which is $12.280.
If your prediction is correct:
When Microsoft announces its results, it is clear the company had a successful quarter – and as you had predicted, its share price climbs. You decide to close your position when it reaches $315, with a buy price of $315.40 and a sell price of $315.00.
You reverse your trade to close a position, so you sell your 200 CFDs for $315.00.
To calculate your profit, you multiply the difference between the closing price and the opening price of your position by its size: $315.00 – $307.00 = $8, which you multiply by 200 CFDs to get a profit of $1.600.
If your prediction is wrong:
Microsoft’s results are worse than expected, and its share price immediately falls. You decide to cut your losses and sell your 200 CFDs at $300.00.
Your position has moved $7 against you, meaning you make a loss of $1400.
Going Short Microsoft CFD
Shorting with derivatives can be an effective way to protect your investments against downward price movements in your non-leveraged investment portfolio. Also, it can be a way to generate profits outright from shares that are falling in value. But when you go short, your potential losses are theoretically uncapped because there is no limit on how high a company’s share price can rise.
Here is an example:
Suppose Microsoft shares are currently trading at a sell price of $307.00, and you think the price will go down. So, you decide to open a short CFD position on 100 Microsoft CFDs. A week later, the buy price reaches $300.00, and you close your position. This means you made $300 in profit ([307.00 - 300.00] x 100 = $700), excluding additional costs.
If the price rises, you register a loss. For example, if Microsoft shares rose to a price of $310, you would make a $400 loss instead, excluding additional costs.
When you create a trading account with CAPEX, you will be able to:
- ‘Buy’ (go long) or ‘sell’ (go short) Microsoft and other 2,000 international shares to speculate on their price rising or falling
- Take a position on our range of ETFs to get exposure to a basket of shares from an entire country, index or sector that could be rising or falling in price.
- Trade a host of global indices – including the S&P 500, the famous technology index NASDAQ 100, the Dow Jones Industrial Average (Wall Street) and the DAX (Germany 30) – to go long or short on the performance of an entire economy with a single trade.
- Use QuantX, the smart portfolio builder that helps you cover the popular industries and only invest in the top performing stocks.
2. Review Microsoft’s Performance and Outlook 2022
Before buying Microsoft stock—or any stock (see our guide on how to buy shares)—it’s wise to do some research into the company’s financials, performance, and outlook. The easiest place to get started is through a company’s annual reports and quarterly reports. Public companies like MSFT are required to publicize detailed information about their financial health in these.
You can find these on Microsoft’s investor relations site or by searching the Securities and Exchange Commission’s (SEC) database.
You may also turn to experts for their input. Brokerage companies frequently release commentary on major stocks and industries, and third-party evaluators like Trading Central provide comprehensive technical and fundamental analysis.
When you combine financial data with expert insight, you will be able to decide how much of your money you want to put into Microsoft stock.
Before you load up the trunk with Microsoft shares, pop open the hood and see what you are really getting into. Remember, when you buy Microsoft stock, you are purchasing a small portion of an actual business:
Microsoft Corporation develops, licenses, and supports software, services, devices, and solutions worldwide.
Microsoft's balance sheet, income statement, competition, and management (all explained in our guide on how to research stocks) will help you give the company a good once-over.
You can access research, analyst ratings, and other key information about Microsoft via your brokerage account or a financial information website. If you like what you see, your next step is to consider whether Microsoft fits into your current investment portfolio.
- Microsoft's market capitalization is $2.6 T
- Microsoft's upward move is 63.1% in 1 year
- Earnings per share (EPS) were up 42.9% over the past year and are forecast to grow by 10.87% per year.
Over the last 3 years on average, earnings per share have increased by 28% per year but the company’s share price has increased by 45% per year, which means it is tracking significantly ahead of earnings growth.
Price to earning ratio (PER) is 37,9. Analyst set up stock fair value around $392.80, which means Microsoft shares price is 12.6% undervalued according to valuation.
*Last update: November 2021. Source: Yahoo Finance
Microsoft paid its first quarterly dividend in 2004. Microsoft dividends has been stable for the last 10 years.
MSFT pays a dividend of $2.30 per share. MSFT's annual dividend yield is 0.67%. Microsoft's dividend is lower than the US Software - Infrastructure industry average of 4.6%, and it is lower than the US market average of 4.41%.
Microsoft's next ex-dividend date will be announced on Microsoft’s investor relations site.
Microsoft Chart Price
Technical traders analyze price charts to attempt to predict price movement. The two primary variables for technical analysis are the time frames considered and the technical indicators that a trader chooses to utilize.
Our web-trading platform, for example, offers 6 chart types (including the famous Japanese candlestick chart) to help you analyze price performance across different timeframes. It also enables you to deal in an instant – directly from the charts. You will be able to open, close and edit positions in just a couple of clicks.
Trading charts always feature distinct patterns that technical analysts can use to interpret the behavior of buyers and sellers. These chart patterns can give traders an indication of where the market could go next. As you will notice when you look at a chart, the market will usually move in one overall direction or trend. There are three types of market trends: uptrends, downtrends, and sideways trends.
From a technical perspective, Microsoft stock is in a strong uptrend channel. The space between the previous low and the $263 high signals buying pressure and strong momentum.
A Microsoft shares forecast for 2022 should include a new record high, but ideally, we should wait for a failed counter-trend to the $300 level (previous high and the dynamic support of the channel).
Follow the 52-week moving average for the lowest price that keeps the primary trend intact with higher odds to resume the upside movement.
Buy Microsoft shares or not?
It is recommended to buy stocks at the major long-term support area. We should buy Microsoft shares at relatively cheap prices (compared to historical values), not expensive prices. Also, have an exit plan for how you will exit a profitable trade. Define how and why you will exit. Since we used to support to get into the trade, you may consider exiting just below a long-term resistance level.
If buying at support, and planning to exit just below resistance, the upside potential should outweigh the downside risk by at least 2:1 or even 3:1. That means that if you buy Microsoft shares at $300, you should be reasonably able to get out of the stock at $275 or higher. In an absolute worst case you lose $25 a share (but since we don’t hold losers forever, this is highly unlikely), but based on the historical chart it is quite feasible to go up $50/share or more. This is known as the risk/reward ratio, a key indicator when deciding to buy Microsoft shares or not.
With CAPEX WebTrader, you can perform an in-depth analysis of the charts with 90 indicators (including moving average, MACD, RSI and Bollinger Bands). The platform also supports an interactive trading activity with high-end research tools helping you interpret market data.
3. Understand the risks and charges
Trading can be seen as riskier than investing due to leverage. But investing also carries a risk – and there is no guarantee that your investments would increase in value, so you could receive back less than you initially invested.
Before deciding to trade in shares, you should take steps to manage your risk. We have courses at CAPEX Academy that take you through risk management and how to mitigate your exposure to risk in the financial markets.
Our costs and charges for trading vary depending on the product that you use to take a position.
Microsoft (MSFT) CFD Trading Conditions
|SPREAD PER UNIT
|OVERNIGHT ROLLOVER - LONG
|OVERNIGHT ROLLOVER - SHORT
- Spread represents the difference between ASK price and BID price.
- Future Rollover adjustment consists of the difference in price between expiring contract and new contract as well as the spread of the CFD.
- Swap is the amount credited to or debited from an account where positions are held overnight.
- Inactivity fee represents the monthly amount deducted if no activity is recorded for 12 months in an account.
4. Access the trading platform and place your orders
To buy Microsoft shares CFD with CAPEX Webtrader is very easy and intuitive. Opening an online trading account is as easy as setting up a bank account. Here are the steps:
Open an account or log in
First, create an account or log in on capex.com. To open an account click the "Register"button and complete your details.
Once the platform is accessed, the registration process must be completed in order to operate with real money. Click "Complete the Registration and Start Trading".
To log in, from the CAPEX website, click on "Login".
Deposit funds into your account
To trade with a live account it is necessary to deposit funds. This is done from the platform itself by clicking on the "Add funds" button:
Also, it is possible to trade on a risk-free demo account with a balance of € 50,000, which is ideal for getting to know the platform and testing trading strategies.
CAPEX offers you different payment methods: debit cards, credit cards, bank transfer, skrill, and more.
It is noteworthy that CAPEX does not charge any fees or commissions for depositing funds.
Look for Microsoft shares
To view Microsoft shares (MSFT) real-time price and chart on the trading platform can click on the "Search" icon located in the left panel or by clicking on "Shares" and then select the instrument, in this case, Microsoft.
Use the indicators and drawings to analyze the chart
Click the indicators icon and select your favorite ones. There are trend following, oscillators, volatility and support/resistance indicators available. To learn how many indicators to use and how to combine then visit the Technical Indicators section in CAPEX Academy.
Set up the order to buy Microsoft shares
To buy Microsoft shares CFD, click on the "Buy" button and a window is displayed to configure the purchase order:
The number of Microsoft shares to be purchased must be entered and it is allowed to set up a Stop Loss to limit the potential loss, and/or a Take Profit to close a profitable position once the Microsoft stock reaches a specific price. These orders can be configured based on price, pips, cash value or percentage.
To proceed with the purchase, click on "Place Order".
However, MSFT trading does not end here. You will want to check out the next step to make sure you are investing your money as well as you can.
Why Trade Microsoft with CAPEX?
- Advanced AI technology at its core: Whether they prefer the web-based and mobile-ready WebTrader or favor the highly popular MetaTrader 5, we make sure investors make effective use of fast and reliable trade execution speeds, complex order and risk management tools, advanced charting options, powerful research tools in collaboration with highly-regarded platforms such as Trading Central or TipRanks.
- Trading on margin: Providing trading on margin (up to 5:1 for individual equities), CAPEX gives you access to the stock market with the help of CFDs.
- Trading the difference: When trading Microsoft CFD, you do not buy the underlying asset itself, meaning you are not tied to it. You only speculate on the rise or fall of the Microsoft stock price. Online trading with CFDs is nothing different from traditional trading in terms of strategies. A CFD investor can go short or long, set stop loss, take profit, and apply trading scenarios aligned with their objectives.
- All-round trading analysis: The browser-based platform allows traders to shape their market analysis and forecasts with sleek technical indicators. CAPEX provides live market updates and various chart formats, available on desktop, iOS, and Android.
- Focus on safety: CAPEX puts a special emphasis on safety:
- capex.com is a website operated by KW Investments Limited, which is authorized and regulated by the Seychelles Financial Services Authority, license number SD020.
- capex.com is operated by Key Way Investments Ltd and is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) (license no. 292/16).
- za.capex.com is operated by JME Financial Services (Pty) Ltd and is authorized and regulated by the South African Financial Sector Conduct Authority (FSCA) (license no.37166)
- ae.capex.com is operated by Key Way Markets Ltd and is authorized and regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (license no. 190005).
- Global partnerships: CAPEX is proud to be the Official Sponsor of Juventus, one of the most prestigious football clubs in the world, a football club that has a special place in the hearts of the people of Italy, with a strong legacy and a dedicated community.
5. Stay up to date with the latest news and rumors about Microsoft
Get the latest Microsoft Corporation (Nasdaq: MSFT) stock news and headlines to help you in your trading and investing decisions.
History of Microsoft
The company’s name stands for micro-computer software, or “Micro-soft”). Originally, Gates and Allen intended to use Microsoft to write code – the BASIC interpreter) for Micro Instrumentation and Telemetry Systems (MITS), which produced the Altair computer.
BASIC turned out successful, so Gates and Allen continued working on their version, plus on other programming languages, selling interpreter software to different manufacturers. Microsoft made its first $1 million in sales by 1978 and moved to Gates and Allen's hometown of Bellevue, Washington by 1979.
The company’s breakthrough year was 1980 when it partnered with IBM resulting in Microsoft creating the hugely popular DOS operating system. This meant that for every IBM Computer sold, Microsoft was getting its share.
Shortly after this launch, most personal computer companies adopted MS-DOS as their operating system. By 1985, when the first version of Windows was released, MS-DOS had become the industry standard, with Apple a distant second.
Microsoft went public on March 13, 1986, selling 2.5 million shares on the first day alone, at a price between $21 and $35.50. The company raised $61 million in what analysts dubbed “the deal of the year.” Bill Gates sold $1.6 million in shares and kept a 45% stake worth $350 million.
In 1990, Microsoft introduced the popular Microsoft Office suite. Additionally, several new versions of Windows followed in the mid-90s, including Windows NT, Windows 3.0, Windows 95, and Windows 98. Internet Explorer, everyone’s favorite web browser in the 90s, came out in 1995. By that time, 90% of the world's personal computers ran Microsoft's operating systems and Office products.
In November 2001, Microsoft launched Xbox, entering the video game console market dominated by Sony and Nintendo. Four years later, Microsoft introduced Xbox 360, which turned out a massive success. Xbox One (November 2013), and Xbox Series X and Series S (November 2020) followed.
In October 2012, Steve Ballmer, then CEO, announced Microsoft would shift away from software and become a “devices and services company,” focusing on tablets (Microsoft prototype Tablet PC was introduced in 2000) and on other hardware such as Xbox, along with cloud computing (Microsoft introduced its cloud service in 2010).
By 2016, Microsoft was already the world’s largest software maker by revenue. In 2018, Microsoft surpassed Apple Inc. as the most valuable publicly-traded company globally after Apple dethroned it in 2010. In April 2019, Microsoft reached the trillion-dollar market value, becoming the third US public company to achieve this feat, after Apple and Amazon, respectively. In July 2021, Microsoft hit a $2 trillion market cap, becoming just the second US public company to do so, after Apple.
Microsoft passed Apple in market cap at the end of October 2021, making it the world’s most valuable public company.
*Last Update: November 2021. Source: Wikipedia