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Why Is Microsoft Stock So Cheap?

The switch to a subscription business is starting to pay off.

Andrew Willis: When was the last time you physically bought software? Or even owned a program? Software's a service now. And Microsoft (MSFT) has become one of the main providers, alongside the likes of Salesforce (CRM) and Workday (WDAY).

With Microsoft, however, the layers of software have accumulated so much that it has also become an infrastructure and platform as a service, which also puts the company among an elite few, including AWS and Google.

Microsoft's switch to a subscription business initially resulted in some slower revenue growth, but when looking at the cloud-based backbone for the system, we can see it's starting to pay off. After growing 45% in fiscal 2022, senior equity analyst Dan Romanoff says Azure is the centerpiece of the new Microsoft.

From Morningstar, I'm Andrew Willis.

Andrew Willis does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.