- Amazon, Google, and Microsoft continue to make wise power plays in order to generate growth.
- These companies have a unique strategy of diversification and market disruption.
- Microsoft seems like the wisest investment.
Amazon, Google, and Microsoft are among some of the biggest tech companies on this earth; and they have reached here by making appropriate decisions at the right time. We will be looking at a number of factors in order to determine which is the best stock for a long or short investor.
Amazon (NASDAQ:AMZN) is simply one of the greatest success stories in the post dot-com era, and is a good example of a company with great foresight. After starting as an online bookstore two decades ago, they have morphed into the world's largest ecommerce site. This was due to strategic reinvesting and a good customer service, combined with fast delivery, and a thirst to venture into emerging industries.
They have been able to achieve all of this by using the internet and algorithms to power sales. They were among the first retailers to use email marketing to boost sales, and also led in terms of ecommerce apps. Plus, they have had the intelligence to use their high traffic homepage to sell some of their own products. In fact, they have so much power in the ecommerce arena that questions are beginning to be asked about whether some of their practices are indicative of a monopoly.
From a financial perspective, Amazon continues to perform admirably. Revenue continues to increase, and for Q3 came in at $25.4 billion. And with Amazon drone delivery set to be launched in 2016, longterm costs will go down while revenue is likely to go up as a result of increased customer satisfaction and convenience.
Secondly, Amazon Web Services (AWS) continues to bring in the big numbers. It brings in approximately $6 billion each year, which is close to the revenue Amazon generates from the rest of its entire North American division. Due to the fact that Amazon has an increasing stronghold in the developer community, one can expect the revenue to increase considerably in five years time.
To add to this, Amazon has also made some wise acquisitions, notably; Zappos, Goodreads, and Alexa.
In a similar vein to Amazon, Alphabet Inc-C (NASDAQ:GOOG) came from humble beginnings and has ballooned into the world's leading search engine and advertising platform. Additionally, they are hungry for growth and diversification opportunities. For instance, they acquired robotics company, Boston Dynamics which leaves them well placed to enter the lucrative arms industry in the future.
Closer to home, Google's release of Youtube Red has triggered investor excitement. This service allows users to stream 30 million songs, have an ad-free Youtube experience, and access exclusive content from top Youtubers. Consequently, this allows Google to compete with Spotify and Netflix (NASDAQ:NFLX) in an industry which continues to grow Y-o-Y.
Additionally, Google's self driving car technology is set to mature soon. And with plans to license the software to other car manufacturers, Google is set to increase its revenue considerably in the near future.
Interestingly, Google has outperformed the S&P 500 during the current fiscal year.
Google is looking healthy from a financial perspective. Google's return on invested capital currently stands at 28.8%, and their return on equity is 15%. This reflects good management decisions and a desire to create a stable longterm business.
After being hit hard by the growth of Apple and having to maintain growth in a sea of competition, Microsoft has re-invented themselves. Under the leadership of Satya Nadella, they are reminiscent of an Steve Jobs led Apple.
He has pivoted the company from one that relies on software to one with a more hardware-oriented focus. The 2015 Surface line of products was met with widespread acclaim by the press and consumers. It is far from being the market leading tablet..., that title belongs to the iPad; however, it has served as inspiration to other Windows laptop manufacturers.
Additionally, Microsoft is hungry to break into new frontiers. Earlier this year, they announced a virtual reality headset called Hololens. It allows consumers to 'beam' screens onto real-world objects. So, for example you could set it to stream social media content whenever you look at your fridge. It also integrates with Microsoft's other products, such as Xbox One, and Office.
Quite simply, there is nothing like it.
Microsoft also continues on its customer acquisition spree by developing a range of free productivity tools such as Onenote, Onedrive, and Sway. Moreover, Skype remains the ip call software of choice for professionals.
Moreover, Microsoft is going toe-to-toe with Amazon in the cloud space with Azure. To quantify their success, Azure adds 10,000 new users per week, 2 million registered developers, and 350 million active directory users. It has a long way to go before catching up with Amazon's AWS; however, with the cloud infrastructure set to double over the next 3 years, Microsoft can add some significant revenue.
When it comes to finances, Microsoft is riding a wave that just keeps going up. Besides outperforming the S&P 500 on both the stock performance as well as net income growth, they have a net profit margin of 22.67%. If that wasn't impressive enough, net operating cash flow is up by 2.87%.
In conclusion, Amazon, Google, and Microsoft continue to stand as giants in the tech industry. The one thing that ties them all together is an insatiable appetite for growth, diversification, and innovation. Interestingly, Microsoft is currently the only company out of the three that gives out a dividend to investors. This doesn't necessarily mean that Microsoft is the best stock, but it is worth thinking of.
Amazon continues to drive the strategy of being everything to everyone. At this moment in time, it leads the growing cloud infrastructure industry by a big margin. Moreover, due to having the willpower to reinvest profits, they have been able to make some key acquisitions for the future. With regard to their financial information, strategy, and incoming products and services, they appear most likely to grow with regard to stock value, and build a stable company.
Google is a company making great inroads. Its recent Youtube Red offering is set to add significant revenue to their topline, and could out-compete Netflix and Spotify. Additionally, their Android platform continues to eat up market share.
Finally, Microsoft is the best stock to invest in. This is due to the fact that Microsoft is making in-roads in the tech hardware industry, and have key developments in place in order to fuel future growth. Plus, with Satya Nadella at the helm, they finally have an innovative leader, who is willing to take risks. All things considered, Microsoft stock looks like the most likely to increase significantly in value.