The software giant's enterprise-oriented business is being rewarded by investors in search of stability while fears about slowing revenue growth have weighed on consumer-focused companies such as Apple Inc. and Amazon.com Inc. The Redmond, Washington-based company's shares have fallen just 11 percent since the start of October - shaving its gain this year to 19 percent - while Amazon and Apple have each tumbled more than 20 percent.
"Microsoft is being viewed by many investors as a place to park your assets while we go through this white-knuckle period," Wedbush analyst Daniel Ives said. "The high-flier consumer names are getting taken to the woodshed."
Excluded from the FAANG group, Microsoft has outperformed those stocks since the start of October as investors bet that spending from businesses for cloud services and software will remain strong. After years of derision for missing opportunities in markets such as digital advertising and social media, Microsoft now finds itself more insulated from the regulatory and data privacy scrutiny aimed at Facebook Inc. and Alphabet Inc.'s Google.
The majority of Microsoft's revenue comes from products it sells to businesses, and increasingly that comes in the form of subscription-based cloud services or corporate software delivered through multiyear deals. Both are less subject to volatility. Spending on enterprise software is expected rise 8.3 percent in 2019, the fastest growing segment within information technology, according to projections from Gartner Inc.
Investors are also bullish on the company's commercial cloud segment, which expanded 56 percent to more than $23 billion in the year ended June 30. The company's Office 365 programs lead in the market for cloud-based productivity tools, while Azure services for storing data and running apps in the cloud have a solid grip on the No. 2 position behind Amazon Web Services.
