Over the past five years, Nvidia (NASDAQ: NVDA) has significantly outperformed other tech giants such as Microsoft (NASDAQ: MSFT) in terms of stock performance. This is quite an impressive feat considering Microsoft’s iconic status in the industry. Microsoft CEO Satya Nadella has been at the helm for over a decade, with MSFT stock showing a 10-year annualized total return of 26.92%, a solid figure that many investors would welcome.
When we look at the five-year cumulative returns of the “Magnificent Seven” stocks, Nvidia stands out with a remarkable 2,002.51% return, surpassing the likes of Microsoft, Tesla, Apple, Alphabet, Meta Platforms, and Amazon. Even with Tesla’s exceptional performance, Nvidia managed to outshine the competition by 79.25%.
Looking ahead, the focus shifts to the next decade and whether Microsoft can continue its upward trajectory. With advancements in AI technology, Microsoft’s Intelligent Cloud segment, including Azure, has shown significant growth, with revenues increasing by 21% year-over-year. The integration of AI into products like Bing search and Edge browser has also boosted user engagement.
In the gaming sector, Microsoft’s acquisition of Activision Blizzard has bolstered its revenue, bringing it closer to its Windows business in terms of earnings. However, cost-cutting measures, including job cuts and studio closures, have been necessary to streamline operations and focus on high-impact titles.
Despite these challenges, Microsoft has managed to maintain strong operating margins by controlling expenses while driving revenue growth. This disciplined approach has resulted in a healthy operating margin of 45.2% and a notable increase in free cash flow.
While companies like Nvidia and Amazon are certainly strong contenders, DailyBubble believes that Microsoft could be the top long-term investment choice among the Magnificent Seven. The company’s strategic focus on AI, cloud computing, and gaming positions it well for future growth and success.