Microsoft Corp. may not be the sexiest or most desirable tech name in a field where Uber, Facebook, Amazon and other ‘Unicorns’ get most of the everyday attention, but according to the numbers, it is still a better-performing tech stock than the entire Unicorn class. A CNBC comparison of unicorn basket stock prices between 2015 and now shows that while a selection of these stocks have had mixed fortunes, varying from 33 percent up to 34 percent down, Microsoft has surged an impressive 126 percent over the same period.
The comparison underscores the fact that while tech unicorns may be all the rage, Silicon Valley still contains a vast amount of investment value for investors who want to make a play within the legacy market. For such investors, companies like Microsoft and IBM, which are still reporting impressive numbers after decades of operations may be a smart and safe play.
In April CCN reported that Doug Kass, president of Seabreeze Partners Management predicted that Amazon stock would surge a massive 175 percent over the next six years, taking it from just under $2,000 per share to an unprecedented $5,000, which would give the company a market valuation of $2.5 trillion. This optimism was mirrored by a panel of 45 analysts polled by financial data company Factset. Buoyed by strong earnings and seemingly limitless potential for future expansion, coupled with its largely successful growth and acquisition strategy, the conventional market wisdom is that Amazon stocks are a flashing buy.
Microsoft by contrast, has flown under the radar, perhaps unfairly encumbered by its perception as a stolid member of the Silicon Valley old guard that does nothing genuinely innovative in the tech space anymore. In reality, by plugging into the dominance of its Windows OS and pushing clients into Azure and Office 365 cloud services, Microsoft has found a reliable, if unglamorous formula for churning out earnings numbers. As a result, the past five years has seen its stock jump a massive 176 percent, with even more upside in view.
For discerning investors, it may now be time to get into the market for Microsoft stock as the company’s strong performance looks set to continue, and Amazon possibly facing a slowdown. According to conventional Wall Street wisdom, when the consensus opinion on a stock is bullish, it may be time to avoid that market because it will become expensive and thus unattractive. This may be starting to happen with Amazon, and its effect could be amplified by other investors seeing things the same way, leading to a minor selloff.
Unicorns Aren’t All That After All
Amazon, Airbnb and Uber may have returned strong double digit growth since 2015, but the figures also show that fellow unicorns Palantir and Snap have not done so well, averaging between zero and 6.69 percent growth over four years. Chinese electronics manufacturer Xiaomi has fared even worse, losing a humonguous 34.83 percent over the same period to end at just under $30.
Unicorn valuation comparison from 2015 to present | Source: CNBCMicrosoft stock, which is available for just under $130 a piece, may just be significantly undervalued compared to Amazon stock which will set investors back at least $1700 a share. For the savvy investor, this might well be the deal of the year.