Has Microsoft Found Its Savior?

 

Did you notice that Microsoft Corporation MSFT is a hot commodity once again? After essentially trading in a sideways channel since late 2009 to April 2013, the stock broke out to a new 52-week and multiyear high of $35.10 on Monday, according to my stock analysis.

With the move, Bill Gates has recaptured his title as the world’s richest man, having a net worth of over $75.0 billion. Microsoft is now valued at $292 billion and is catching on fire.

Only a few months ago, I was questioning the potential of Microsoft; I felt that the former Wall Street darling was set for a crash landing unless it could convince the market that better times were ahead. (Read “Another Lost Decade for Microsoft?”)

Fast-forward three months, and my stock analysis now suggests that Microsoft seems to be firing on all cylinders and is once again catching the attention of Wall Street and investors.

The chart of Microsoft below shows the stock (as shown in red candlesticks) moving higher in relation to the S&P 500 (as shown by the green line), based on my technical analysis.

Chart courtesy of www.StockCharts.com

My stock analysis indicates that the rising of the stock has not been triggered by its new “Windows 8” touchscreen or the Windows smartphone in association with Nokia Corporation NOK; but the company is showing great potential in its ever-growing gaming division.

On Tuesday, Microsoft launched its highly anticipated “Xbox One,” which will represent a dramatic change from the “Xbox 360.”

Based on the somewhat glitzy presentation in New York City, the Xbox One looks like it has seen a radical change, evolving from its previous models as the company tries to continue the popularity of its gaming console; the Xbox has developed into more of an integrated entertainment system that will allow users to access games, online movies, music, and the Internet.

In fact, since I purchased my Xbox 360 a few years ago, I have watched the steady evolution of the console from being solely for gaming and movies to a much more integrated platform that allows for online gaming and movies, along with Internet features.

The next-generation Xbox One looks like it will offer even more. The console will allow for real-time switching between live TV, video games, Internet, Skype, and other services. You will be able to play a game while you toggle over to live TV or the Internet.

The aftermath will be a more powerful entertainment platform that could allow Microsoft to widen its distance from the rival “PlayStation 3” (soon to be “PlayStation 4”) and “Nintendo Wii.”

While Microsoft is still not providing growth at the same scale as the likes of Google Inc. GOOG or Netflix, Inc. NFLX, according to my stock analysis, the growing acceptance of its gaming unit will offer excitement to a company that many felt was ready to be buried.

Perhaps as the gaming unit grows, Microsoft may even decide to split its gaming unit to increase the lock-in value that I believe will grow.