Microsoft Corporation (NASDAQ:MSFT) Leading the Market in Cloud Computing

November 14, 2016

Portfolio Manager Kevin Walkush of Jensen Investment Management says his firm has held Microsoft Corporation (NASDAQ:MSFT) for a long time, as he sees the company as one of the top global cloud service providers.

They are an enterprise and consumer software company, which also provides hardware products such as tablets and PCs. The company’s focus and leading growth driver is the adoption of cloud computing in the enterprise and consumer software markets of which they are a leading market participant.

We think they are one of the top global cloud service providers. People may not realize they were an early market entrant and offered a full suite of cloud services, and that enabled them to establish a strong early position in the market. Now they’re benefiting from that early-mover advantage with a market-leading offering.

Another unique thing about Microsoft I would point to is the company is both an enterprise and consumer IT company, which is unusual. IT companies usually stick to one end market group, but Microsoft caters to both and does it well in our opinion.

…Right now enterprise migration to the cloud is a fundamental change in software, and Microsoft is one of the key leaders driving that. We think Microsoft will benefit greatly over the long term as a result. We believe recent cloud success has shifted investor focus away from concerns about historical PC market weakness. However, we believe the PC market is beginning to stabilize, and the company’s success with Windows 10 is fundamentally changing investor perception of this strong, cash-flow-generating business.

Kevin Walkush