In last week’s newsletter, I introduced the acronym taGMan to help remember the seven stocks to own for a new electric vehicle world.
Tesla, Apple, Google, Microsoft, Amazon, Nvidia, and General Motors (GM).
Let’s start digging a little deeper into why I believe each of these companies will thrive in a future of growing electric vehicle adoption, autonomous vehicle capability and new transportation mobility solutions. Since I’ve discussed Tesla and GM previously and extensively, let’s take a look at why Microsoft will be a winner in a future transportation-as-a service (TaaS) automotive environment.
Microsoft reports its Q2 2021 earnings later today.
Microsoft is an earnings powerhouse. The company’s productivity, personal computing and intelligent cloud businesses are almost unassailable. These businesses drove over $140 billion in fiscal 2020 revenue, and are set to grow substantially for 2021 (fiscal year ends June 30). Microsoft has a stock valuation of over $1.7 trillion. At that level of valuation, some may think the stock does not have much room to grow further. The beauty of owning Microsoft, however, is the leadership is always striving to attack new markets to drive new sources of profitable revenue. New sources of revenue ultimately drives a higher stock valuation.
One important new market the company is attacking is the self-driving car industry using the expanding technology within its cloud business. The recent announcement that Microsoft is leading a $2 billion investment round into GM’s Cruise autonomous driving subsidiary is a perfect example of Microsoft investing in what some believe will be an $8 trillion industry. This new partnership will allow Cruise to utilize Microsoft’s Azure cloud computing technology to commercialize its self-driving data solutions at scale. Importantly, Microsoft gets to stay close to Cruise’s autonomous technology to incorporate additional capabilities useful to other future autonomous technology customers.
As highlighted in a recent VentureBeat article by Ben Dickson, all companies developing self-driving capability are essentially developing artificial intelligence businesses. Only a few companies can assist with the algorithm development and big data analysis required to build the machine learning capability necessary for autonomous driving. Microsoft is one of those companies. And unlike others, it has has chosen to partner across many customers to cast a wide net over many capabilities. Ultimately, this strategy will produce a new and very profitable business for Microsoft as the world of TaaS develops.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.