The Motley Foolยท2025-10-28 01:00Core Thesis - Microsoft's investment thesis is strengthened by its consistent performance and growth, particularly in the context of the AI boom, making it a compelling choice for investors seeking market-beating returns [1][2]. Performance Metrics - Microsoft has outperformed the Dow Jones Industrial Average, with a year-to-date increase of 21.9% compared to the Dow's 8.6% [2]. - Over the last decade, Microsoft's stock price has increased by 826%, with diluted earnings per share rising by 847%, indicating that stock price growth is aligned with earnings growth [7]. Financial Health - In fiscal 2025, Microsoft reported a revenue growth of 15%, net income and diluted earnings per share growth of 16%, and operating income growth of 17% [11]. - The company maintains a forward earnings multiple of 33, which is considered a good value given its solid and repeatable financial results [11]. Shareholder Returns - Microsoft has a history of returning capital to shareholders through dividends and stock buybacks, having raised its dividend by at least 9% annually for eight consecutive years [12]. - The current low dividend yield of 0.8% reflects the company's strong stock performance rather than a lack of dividend increases [12]. Strategic Positioning - Microsoft is leveraging AI to enhance its operating margin, allowing for faster earnings growth compared to sales growth, which is notable given its diversified business model [9]. - The company is well-positioned to withstand economic downturns due to its strong balance sheet and diversified business segments, making it a reliable investment choice [13]. Future Outlook - Microsoft is viewed as a strong growth stock for 2026, particularly for investors interested in AI and cloud computing themes, without the risk of over-reliance on a single successful initiative [14].