Last updated: December 6th, 2024
Mega-cap US technology stocks continue to outperform, with the Nasdaq Composite Index reaching a record high close in December 2024.
Of the Magnificent Seven stocks, Nvidia is clearly leading the way in terms of share price gains — but Microsoft (MSFT) stock has also gained over 18% year-to-date (as of 6 December, 2024).
(Related: IG Review: Good Platform For CFD Traders?)
Publicly listed in March 1986 on the Nasdaq stock exchange under the ticker MSFT, Microsoft initially became a household name for its Windows operating system and productivity software.
Now, the multinational company is also a leader in cloud services, through its Azure platform, and artificial intelligence (AI) through collaboration with OpenAI.
Above: Microsoft stock has outpaced the S&P500 by 234% over the last 5 years. Zoom out for better long-term context.
How Has Microsoft Stock Performed?
It’s been a buoyant few years for the Microsoft stock price.
- The share price reached an all-time high of US$430 in May this year, after a 38-year history in the market.
- That record high was eclipsed in July — reaching US$465 when the Nasdaq rallied on expectations of US rate-cutting.
The stock price saw a few dips, in August, September and October. Concerns over the company’s increased spend on AI troubled investors following its Q4 earnings report in July.
Important!
Microsoft, Apple and Nvidia have been trading places throughout 2024 as the largest company by market cap. Currently Apple is number one, and Microsoft is third with a valuation of US$3.2 trillion.
Despite a 16% increase in revenue, MSFT stock fell in the immediate wake of its Q1 fiscal 2025 results, released in October.
The stock has underperformed the Magnificent 7 since then, and compared to the broader market gains driven by inflows into tech stocks and mega caps. The S&P 500 saw its best month of 2024 in November, buoyed by Trump’s election by the American people.
In the three-months to 6 December, MSFT shares gained just over 7%, while Amazon stock lifted over 22%, Nvidia increased more than 35%, and Tesla’s share price jumped 55%.
At the time of writing, MSFT shares are valued at US$442.
(Related: Our Pick Of The Best Trading Platforms In Australia.)
Increased retail investor inflows into the stock market starting in 2020 collectively lifted US share markets, but the tech boat floated to the top.
Investment has been especially concentrated in the largest tech players, dubbed the Magnificent Seven — Meta, Microsoft, Alphabet, Apple, Amazon, Tesla, and Nvidia.
Did You Know?
Microsoft invested $10 billion in OpenAI — that’s the team behind popular applications such as ChatGPT and Dall-E that launched in 2022 and 2023 respectively, leveraging generative AI to provide chatbot and image generation services.
The partnership has allowed Microsoft to integrate AI virtual assistants, or ‘Copilots’ into its software, and be at the forefront of AI’s adoption.
The share price rebounded to just over $377 — which was a record high at the time — after Microsoft announced Altman would join the company to lead a new advanced AI research team.
(Related: How To Buy Netflix Shares In Australia.)
In October 2024, the MSFT first quarter (FY25) results showed:
- Revenue had increased 16% to US$65.6 billion.
- Net income increased 11% to US$24.7 billion.
- Diluted earnings per share was $3.30, and increase of 10%.
- Cloud product and services revenue was $38.9 billion, up 22%.
Satya Nadella, chairman and chief executive officer of Microsoft, said the company was building out next-generation AI infrastructure and had seen:
- Azure OpenAI usage double in the previous six-months.
- A 55% quarter-over-quarter increase in Copilot Enterprise customers.
(Related: 15 Best Stock Trading Apps In Australia.)
Microsoft [MSFT] Performance Metrics To Watch.
Data about Microsoft drawn from Yahoo Finance as of 6 December, 2024:
| P/E Ratio | 36.12 |
| PEG Ratio (5 Year Expected) | 2.32 |
| Return on equity (ROE) | 35.60% |
| Shares Outstanding | 7.43B |
| 3-Month Average Volume | 20.24M |
How To Buy Microsoft Shares In 4 Steps.
Ready to buy?
Timing is critical when buying stocks, even when a company is clearly established and valuable, like Microsoft.
Simply put, you need to buy at a price lower than the likely share value when you intend to sell — which could be months, years or decades from now.
Get professional financial advice to determine how to include US stocks in your portfolio to align with your goals, investing timeframe and appetite for risk.
Once you’ve got a solid plan, here’s how to use stock trading platforms to buy Microsoft shares or ETFs that include MSFT:
1. Understand Risks And Obligations Of Owning US Shares.
Several Australian-based brokers provide what’s known as CHESS-sponsored shares.
Whereas, when you buy US shares, brokers use a custodial model — they hold the shares for you.
You don’t have a choice in this, but it does mean you should be extra careful to choose a reputable broker likely to remain solvent.
You’ll receive all the same benefits and returns as any other shareholder. You retain control of your shares, and can sell them at any time.
Did You Know?
The custodial model can result in lower fees, and also allows for fractional investing — so, you can potentially buy part of a MSFT share if you can’t afford a whole share.
Owning Microsoft shares can also increase your tax liabilities. You’ll need to:
- Pay a 15% US withholding tax on dividends you earn from your MSFT shares.
- Pay tax to the ATO as any returns from your Microsoft stock counts as income.
You may be able to claim a foreign income tax offset, but it’s best to get advice from an accountant.
2. Select The Best Broker With Access To US Markets.
Choosing the best share trading platform comes down to your specific criteria, but generally people look for low-cost and easy-to-use apps.
Important criteria to factor in if you want to invest in Microsoft is whether the broker:
- Has access to the Nasdaq stock exchange where MSFT is listed.
- Has cost-effective foreign currency exchange fees in addition to low transaction fees.
Table stakes for a quality stockbroking app in Australia is being an ASIC-registered broker — check the platform’s website for their Australian Financial Services (AFS) Licence number, and double-check it’s valid via ASIC Connect.
Creating a new account on a share trading platform will feel familiar to any app, but there are usually some additional KYC (Know Your Customer) requirements. Be prepared to provide:
- Your name, personal contact details and date of birth.
- Your tax file number (TFN).
- A verifiable form of identification.
- Your bank account number for adding and withdrawing funds.
- A completed W-8BEN form which is required by the U.S. authorities.
Important!
You can reduce the amount of tax you’ll pay from 30% to 15% by ensuring compliance with US tax laws by completing a W-8BEN form when you sign-up for a broker. The process for completing and submitting this form varies between apps.
3. Deposit Money And Make Your Trade.
Finally, you can execute the buy order from within your online brokerage account. Follow these steps:
- Deposit cash into your brokerage account from a linked bank account or credit card to fund your trades.
- Search for ‘MSFT’ or the ticker symbol of the ETF/fund you want to buy via the platform’s user interface.
- Enter the purchase amount or number of shares, assuming the Microsoft share price listed in the app matches your expectations.
- Choose an order type. You can buy immediately at the current market price or set limit or stop-loss orders to automatically buy when MSFT reaches a specific price point.
- Place your order. It can take up to two days for the transaction to be settled.
What Are Microsoft’s Growth Prospects?
Investors continue to buy up tech stocks, raising valuations to extraordinarily high levels.
If you’re trying to determine whether Microsoft stock is overvalued or still represents good value, you’ll get different answers depending on who you ask.
Morningstar analyst Dan Romanoff said in November that stronger revenue growth for MSFT lay ahead, although macro and currency factors would pressure near-term revenues.
Robust financials and the anticipated ongoing demand for cloud environments to test and deploy AI applications bode well for Microsoft.
did You Know?
Bloomberg reported in June 2024 that Microsoft plans to invest $3.2 billion in AI and cloud facilities in Sweden — the company’s largest ever infrastructure investment in the country.
Sales of the company’s Azure cloud service grew 33% in Q1 FY25, with 12 points of that attributed to AI services. Microsoft said demand for cloud computing continues to outstrip its capacity.
Microsoft has also started developing its own custom-deigned AI processing chip, which could help it reduce its own reliance on Nvidia chips and claw back some market share from the breakout GPU supplier.
Some key risks for US markets generally include sentiment shifts triggered by ongoing inflationary pressure, changes to unemployment levels, and the impact of Donald Trump’s promised tariffs and tax cuts in 2025.
Trump’s alignment with Elon Musk — who’s been tapped to lead an efficiency commission in the new President’s administration — could have repercussions.
Did You Know?
The Tesla CEO co-founded OpenAI but stepped down from his role in 2015 and has since launched his own AI company, xAI.
Musk is currently pursuing a lawsuit against OpenAI and Microsoft alleging contract violations and antitrust activities, and has been vocal in his criticisms.
Another unknown is whether customer demand for AI tools will expand enough to justify the enormous investment in AI advances.
A study from Slack issued November 2024 found the number of workers using AI at work had stalled in the previous 3-months, compared to rapid growth noted in prior surveys.
The number of global workers who said they’re excited about AI helping them get stuff done also dropped from 47% to 41%.
Your FAQs About MSFT Stock, Answered.
Consider these facts before you become a Microsoft investor.
How Much AU$ Do I Need To Buy Microsoft Shares?
Each MSFT share is valued at around US$442 (~AU$686) as of December 2024. For Australians looking to invest in the company, the cost of purchasing MSFT shares is impacted by:
- The current AUD/USD exchange rate. When the Aussie is weaker, your purchasing power is reduced.
- Currency conversion and brokerage fees offered by the online stock broking app you use.
Which Indices Is MSFT Part Of?
Microsoft is a constituent of the three major US stock market indices used to benchmark share market performance:
- Dow Jones Industrial Average.
- S&P 500 index.
- Nasdaq Composite Index.
What ASX-Listed ETFs Hold MSFT?
Exposure to Microsoft shares can be gained through a number of exchange-traded funds (ETFs) listed on the Australian Securities Exchange (ASX), such as:
- Betashares NASDAQ 100 ETF (NDQ).
- Global X Morningstar Global Technology ETF (TECH).
- Global X FANG ETF (FANG).
- BlackRock iShares Global 100 ETF (100).
- Vanguard MSCI Index International Shares ETF (VGS).
Does Microsoft Pay Dividends?
Yes, Microsoft pays dividends. In 2024, it paid a quarterly dividend of US$0.75 per share, up from $0.68 per quarter in 2023 and $0.62 per quarter in 2022.
Has Microsoft Had A Stock Split?
Microsoft has had nine stock splits since it was publicly listed. The most recent split was a 2-for-1 common stock split in 2003.
Should You Buy Microsoft Stock?
We are journalists, not investment experts, so we do not offer investment advice.
What we do know is Microsoft is a long-standing company with a solid foundation for sustained growth through its cloud and productivity business streams, beyond the so-called ‘AI halo’ that’s driven optimism among investors.
However, its reemergence as an innovation leader — and the spike in its share price — is on the back of its moves in the AI sphere.
Competitive threats, economic shocks, and uncertainty about AI’s true utility could impact the MSFT share price going forward.
Jody
Nelson says:
I attempted to use the “hack” to dodge conversion fees, but sadly after converting AUD to USD on a Wise account, there doesn’t seem to be a way to deposit that money into eToro; i.e. eToro recently disabled Wire transfers and Wise doesn’t support SWIFT transfers for sending USD to a bank in the US?
John Keys says:
CMC Invest are an abysmal in turning around new accounts.
Over 1 month to setup up an account with an investment trust, and still waiting. I was promised 5 business days.
Reg Watson says:
Given that China’s economy is going down the toilet how the heck do we expect an appreciation of the Aussie in 2024 ? We are tied to China.