by Microsoft Corporation is a technology company that generates revenue by developing, licensing and supporting a variety of software products and services, designing and selling hardware, and providing online advertising.
Products include operating systems for personal computers, servers, phones and other smart devices, server applications for distributed computing environments, business applications, desktop and server management tools, software development tools, and online advertising.
Microsoft also designs and sells hardware, including the Xbox 360 game and entertainment console.
The company offers cloud-based solutions that provide customers with software, services and content over the Internet through shared computing resources located in centralized data centers. Cloud revenue comes primarily from usage fees and advertising.
Microsoft recently revealed a multi-year, multi-billion dollar investment in Open AI, the company behind the ChatGPT artificial intelligence program.
What’s the latest from Microsoft?
These are Microsoft’s performance figures for the fourth quarter of last year, released on January 24, 2023:
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Revenue for the fourth quarter of 2022 was $52.7 billion, up 2% year over year.
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Net income for the fourth quarter of last year was $16.4 billion, a 12% decrease from the same period in 2021.
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Expected revenue for the first quarter of 2023 is expected to be in the range of $50.5 billion to $51.5 billion.
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The company recently announced it would lose 10,000 jobs, or nearly 5% of its workforce.
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Microsoft recently revealed a multi-year, multi-billion dollar investment in Open AI, the company behind the ChatGPT artificial intelligence program. This is the third phase of a partnership between the two companies that started in 2019.
Here’s what you need to know about buying and selling Microsoft stock.
Note: Investing in the company’s shares has no guarantees. When you buy stocks, you can lose some or even all of your money.
How to buy Microsoft stock
Before deciding to open an account, you should establish your investment objectives, including the amount you wish to invest, the length of time you plan to invest, whether you are comfortable with the risks involved, and whether you can afford to lose money .
If you’re looking to buy Microsoft stock, the following steps will guide you through the process:
1) Open a trading account
Whether you are an experienced stock trader or a novice, you will need to open an account with a trading platform.
It’s worth taking the time to look into the costs involved: Most, but not all, platforms charge a stock trading fee, and some may also charge an annual fee for holding stock.
A variety of trading platforms are available, from online DIY platforms like Hargreaves Lansdown, AJ Bell and Interactive Investor, to app-based platforms like eToro and Trading212.
2) Where does Microsoft trade?
The ticker symbol for Microsoft is MSFT. Microsoft is listed on the Nasdaq in the United States, open for trading from 9:30 am to 4:00 pm (Eastern time) Monday through Friday.
Most trading platforms allow you to buy US stocks. You will be charged an exchange fee (typically around 1%, but can range from 0.15% to 1.5% depending on the platform). Many platforms also charge a slightly higher trading fee for buying US stocks.
If you plan to trade US stocks on a regular basis, it’s worth looking into the different platforms as their fees can vary significantly. A small number of trading platforms, such as IG, allow you to hold your account in US dollars, which may reduce the currency exchange you have to pay.
You will be required to complete a Form W-8BEN which qualifies you for a withholding reduction of 30% to 15% for eligible US dividends and interest.
You will also have currency exposure if you hold US stocks. If the pound weakens against the dollar, your shares will be worth more in pounds (and vice versa).
As with UK stocks, any profits on US stocks will be subject to Capital gains tax, subject to your annual allowance (currently £12,300). You won’t have to pay capital gains tax if you hold the shares in an individual savings account or self-investment personal pension.
3) Do your research
To learn more about Microsoft, visit the company site investor relations page.
It’s also worth comparing Microsoft’s valuation with other comparable global software companies. One way is to look at their relative price-earnings ratios: Stocks trading with high price-earnings ratios have high expectations of significant growth in the future.
Another useful research tool is brokers’ 12-month stock price forecasts, which are available on financial websites. There are currently nearly 40 brokers following Microsoft stock, and their price predictions give an indication of the upside and downside risk to the Microsoft stock price over the next year.
4) Should you invest on a monthly basis or in a lump sum?
People tend to buy stocks as an all-in purchase or to trickle down their investment on a monthly basis over time.
The monthly investment is often referred to as a means of “pound cost averaging”, whereby making regular contributions helps smooth out the ups and downs of the stock market. This provides some protection if the share price falls after you buy the shares, as you will effectively be investing at the average share price for the entire period.
However, drip feeding your investment can sacrifice capital growth if the stock price is rising, and you may also pay more in stock trading fees.
5) Place your order
When you’re ready to buy Microsoft stock, log into your trading account. Type the ticker symbol MSFT and the number of shares you want to buy or the amount of money you want to invest.
Many platforms also allow you to add a “stop loss” after you buy the shares, which allows you to limit your losses if the share price falls. For example, if you buy shares at £100 and set a stop loss of £90, your shares would be sold if the share price falls below £90, limiting your potential loss to 10%.
6) Monitor Microsoft performance
Whether you hold shares in a few or many companies, you should monitor the performance of your shares regularly.
Monitoring your portfolio allows you to make necessary adjustments, either by buying additional shares or by selling part of your holding.
How to sell your Microsoft shares
When you want to sell your Microsoft shares, log into your trading platform, type the ticker symbol (MSFT) and select the number of shares you want to sell.
If you made a profit, you may have to pay capital gains tax (CGT) on the sale of your shares. However, as mentioned above, this is not the case with tax-free wrappers such as individual savings accounts.
How to indirectly invest in Microsoft
You can make a profit if you invest in Microsoft stock, however, holding shares in a single company is riskier than investing in a wide variety of stocks. A diversified portfolio should also reduce volatility.
One option is to invest in Microsoft indirectly by investing in a fund, unit trust, or exchange-traded fund (ETF) that holds Microsoft stock, among others. These products provide a ready-made portfolio of shares of different companies.
There is a wide range of options, including global, US and technology funds and mutual funds, along with ETFs that track the Nasdaq index. However, you will pay an annual management fee to hold these products.
