How To Buy Microsoft Stock (MSFT)

Introduction

Microsoft Corporation is one of the biggest technology giants with a high artificial intelligence (AI) rating, and the cloud computing business is growing at a rapid pace. The company’s technological advancements, vision, and leadership over the years are a few reasons why investors are not backing down.

Microsoft stock has a market capitalization of 2.77 trillion USD, making it the second highest market cap after Apple (AAPL). Learn all the fundamentals about investing in Microsoft (MSFT), including the risks you should look out for. 

Highlights and Key Takeaways

• Microsoft is a leading tech company in the AI and cloud computing industry.

• Microsoft stock has a market cap of 2.77 trillion USD.

• MSFT has surpassed Wall Street’s EPS estimates several times over the years.

• To monitor your MSFT investment, understand fundamental stock KPIs like price to earnings, price to sales, and the company’s revenue.

Understanding Microsoft as an Investment

Why Invest in Microsoft?

Microsoft believes technology is a powerful force and meaningful innovation can contribute to a better world. The company’s beliefs are evident in how they integrate powerful AI tech into products and services, helping customers live better. With Microsoft’s digital technology, companies can improve their tech responsiveness and speed to increase efficiency.

Technically speaking, Microsoft’s stock is a great investment because its EPS consistently exceeds Wall Street projections. Earnings per share, or EPS, is a measure of a company’s value. A higher number indicates that investors are generally willing to pay more for the company’s shares.

“This is a clear positive as right now Microsoft has the only game in town around a full AI platform — Dan Ives

Risks Associated With Investing in Microsoft

MSFT is a historically stable stock, especially due to its adaptability, vision, trust in every worker, innovation, and great leadership. However, like every stock, there are risks. Historical examples, like the disastrous effects of Windows 8 in 2012, highlight how crucial it is for investors to be aware of their possible risks.

Here are some of the risks that come with investing in MSFT:

• Volatility of the stock market: The stock market value fluctuates as the asset price always varies from the average price at any point in time. Even though MSFT is more stable than most stocks in the market, external events can create uncertainty.  

• Media: Another name for this risk is the headline risk. Media and publications through headlines can directly or indirectly harm a company’s stock market value. This is because negative news causes most investors to sell the company’s stocks.

• Competition: Competition is not always a problem, but sometimes causes businesses to have a reduced market share, which typically affects overall profitability. MSFT is undoubtedly a competitor to FAANG – Facebook, Amazon, Apple, Netflix, and Alphabet. 

Having a diverse portfolio and being aware of the particular elements that support MSFT’s stability will help investors make wise choices.

How To Buy Microsoft Stock

Choosing a Brokerage

One of the first steps to learning how to buy Microsoft stock is by understanding how to select a broker. Brokers determine your trading or investing experience. For this reason, it’s important to choose a broker after considering these factors:

• Trading fees: Every platform has a unique commission rate or fee structure. It is important to compare the costs and settle for the most suitable fee structure. Some platforms charge a flat fee, while others charge between 1% to 2% of the transaction amount.

• User interface: The user interface determines user experience. It’s important that navigation is simple and that all icons and buttons are easy to understand. Check if you can easily access all sections of the websites and invest or trade easily.

• Customer service: It’s critical to have readily available customer service. Make sure the broker offers ways to get in touch with them quickly, such as a phone number, email address, or a live chat window that is open 24/7. An easier time investing is ensured by a quick response from the support system.

Placing a Stock Order

To place a stock order, follow these steps:

• Step 1: Open a brokerage account with a licensed and reputable firm.

• Step 2: Decide on the number of MSFT shares you want to buy using the broker.

• Step 3: Choose an order type (market or limit order). Limit orders let you choose a specific price to buy or sell stocks, while market orders let you buy or sell stocks at the best available price.

• Step 4: Place the stock order by tapping the “place order” button in the appropriate section. 

Monitoring Your Investment

Understanding Stock Performance

Monitoring your MSFT stock helps you know when to buy, hold, or sell. To successfully monitor MSFT and make the right decisions, you should understand how to read the stock chart, along with understanding financial reports and other stock KPIs like price to earnings, price to sales, and overall company revenue.

You can get most of the crucial information about the company and its stock history by reading the stock chart. It represents the share price of MSFT and available trading volume. On every stock chart, the price change is usually on the vertical axis, while the period is on the horizontal axis.

Take your time to understand price movement on the charts.

Below are other stock KPIs to understand when investing in MSFT:

• Price to earnings (P/E): This helps you project what a market can pay at any specific time for a stock based on its past, present, or future earnings. If Microsoft stock has a high P/E, it means that the stock price is high relative to earnings.

• Price to sales (P/S): A P/S ratio tells you how much other investors can pay per dollar of sales for a stock. If a company like Microsoft has a low P/S ratio, then the stock could be undervalued.

• Company revenue: The company’s earnings typically determine the movement of the stock price. However, in some cases, companies with low earnings can have stock prices that are soar because of investor expectations.

When To Sell Your Stock

The next step to understanding how to buy Microsoft stock is knowing when to sell it. Here are some reasons that may warrant a sale:

• When you hit your set price target:  When the price of your stock rises over what you paid for it, it’s one of the ideal moments to sell.

• Deterioration in MSFT’s fundamentals: You should sell your stocks when it’s evident that MSFT is deviating from its fundamental beliefs and vision in the technology space.

• Personal needs: You can sell your MSFT stocks once you need your profit from the investment.

• it is advisable to sell Microsoft shares when you have realized your predetermined price target

How To Invest in Microsoft With Funds

To invest in MSFT through index funds or exchange-traded funds (ETFs) that own MSFT, you need to have a brokerage account. Examples of some mutual funds invested in Microsoft stock are:

• The Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX).

• The Vanguard 500 Index Fund Admiral Shares (VFIAX).

• The SPDR S&P 500 ETF (SPY).

• The Fidelity 500 Index Fund (FXAIX).

Conclusion

With the ongoing growth of artificial intelligence and cloud computing, Microsoft presents itself as a promising investment prospect. The company’s financial health is demonstrated by its constant outperformance compared to Wall Street’s projections for EPS. 

It’s important to do extensive study before thinking about investing in MSFT. Examine the precise causes behind Microsoft’s strong market position and take into account its most recent performance indicators.

Rather than just rating a brokerage as “good,” consider aspects like reputation, costs, and customer service when selecting one. Make sure the brokerage you’ve chosen is authorized and governed to protect your money; for clarification, present particular instances or justifications.

FAQ

How Can I Purchase Microsoft Stock?

To purchase Microsoft stock, open an account with a licensed and regulated brokerage. Search for “MSFT” or “Microsoft” and place a stock order.

Does Microsoft Pay Dividends?

Yes, Microsoft pays dividends. The company has been seen to pay a dividend usually within 12 months.

Are Microsoft Shares a Good Buy?

Yes, Microsoft shares are a good buy because they have a high market capitalization and a good EPS. The company believes in innovation and is rapidly growing in the AI and cloud computing space.

What Is the Best Stock To Buy Right Now?

The best stock to buy right now is MSFT. You can also consider buying Nvidia (NVDA), Amazon (AMZN), and Snowflake (SNOW) stocks.