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Microsoft Nears Breakout As AI, Cloud Acquisition Lifts MSFT Stock

Along with Amazon.com (AMZN) and Google parent Alphabet (GOOGL), Microsoft (MSFT) is already a leader in cloud computing. Now Microsoft is expanding its cloud and artificial intelligence (AI) capabilities with a new acquisition, lifting MSFT stock toward a breakout.




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In April, Microsoft agreed to buy Nuance, a leading provider of conversational AI and cloud-based ambient clinical intelligence for health care providers.

The acquisition is the latest step in Microsoft’s efforts to provide industry-specific cloud industry offerings. In 2020, the software and cloud giant introduced Microsoft Cloud for Healthcare, aimed at the rapidly transforming and growing health care industry.

Nuance solutions are currently used by over 55% of physicians and 75% of radiologists in the U.S. The Massachusetts-based company’s systems are also used in 77% of the nation’s hospitals.

Microsoft CFO Amy Hood said Microsoft Cloud generated $17.7 billion in commercial cloud revenue last quarter, up 33% year over year.

With a track record of stable earnings growth, both Microsoft and Alphabet earn a spot on IBD Long-Term Leaders.


See Who Joins MSFT Stock On The Leaderboard List Of Stocks Near A Buy Point


Will Microsoft Stock Win Race To Join AAPL Stock In $2 Trillion Club?

With a $2.2 trillion market capitalization, Apple (AAPL) is currently the sole member of the $2 trillion club. But MSFT stock, Alphabet and Amazon.com are all vying to gain membership. Microsoft is closest, with a $1.96 billion market cap. Amazon ($1.74 billion) and Alphabet ($1.62 billion) are not far behind.

But stocks don’t operate in a vacuum.

The performance of the major stock market indexes will impact how quickly these cloud stock can hit the $2 trillion market cap benchmark. The current stock market trend is under pressure, meaning it’s a time to proceed with caution as the indexes, particularly the Dow Jones Industrial Average, try to shake off any selling pressure.

MSFT Stock Among Top Large Caps Near Buy Points

Including Microsoft, the largest of the large caps are all testing new buy zones.

Off to a good start in strong volume Monday, MSFT stock is just shy of a 263.29 buy point in a cup-shape base. Its relative strength line is edging higher, within striking distance of a new 52-week high.

In addition to that strong chart action, Microsoft’s fundamental performance remains strong. Boosted by a 37.1% pretax profit margin and 40.1% return on equity, Microsoft sports an A SMR rating, which tracks sales growth, profit margins and ROE.

As MSFT stock nears a potential breakout, see if Alphabet, Amazon and Apple can also launch sustained new climbs.

Follow Matthew Galgani on Twitter at @IBD_MGalgani.

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