Microsoft Stock Can Survive Volatility, Unlike the "Popular" Tech Plays

The race to the first $1 trillion market cap is on. The tech behemoths in the stock market led the way in 2017, and investors cheered as they saw their brokerage accounts swell.

And while many think either Apple Inc. (Nasdaq: AAPL) or Alphabet Inc. (Nasdaq: GOOGL) will be the first to hit a $1 trillion market cap, Microsoft Corp. (Nasdaq: MSFT) may actually be first. We'll get to why we're so bullish on Microsoft stock in just a bit...

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You see, the tech companies that led the markets high last year were the ones that came on the scene relatively recently with game-changing products and services. Cloud computing is just one of the many technologies they offer that are truly changing the world.

And you likely know that, as a group, these tech stocks got whacked in the first quarter of 2018.

Aside from normal, corrective pullbacks that were long overdue, this year's mini "tech wreck" exposed, as Warren Buffett says, who was swimming naked.

The full quote is "Only when the tide goes out do you discover who's been swimming naked."

What it means is that when times are good, investors like most stocks and forgive their transgressions. But when times change, as they certainly did last quarter, we get to see which companies are truly tuned into what's important - and growing.

Tech Revolution: We're on the brink of a global energy overhaul, and one tiny company has the key to it all. If you want to find out how to position yourself for the biggest, most life-changing gains, you better strike now.

Money Morning Chief Investment Strategist Keith Fitz-Gerald pointed out the split that seems to have overtaken the technology sector's leaders. He said the broader, tech-led rollover would treat tech stocks based on personal trust differently than those based on corporate data, security, and operations.

The former - led by Facebook Inc. (Nasdaq: FB) and Twitter Inc. (NYSE: TWTR), for example - are going to get clobbered, while the broader pullback will give savvy investors in the latter a massive and potentially very profitable opportunity.

Their performances bear that out...

Facebook stock is down about 19% from its February peak thanks to its lack of protection of customer information. Cloud computing and services company Alphabet, for example, is down about 13% from its zenith.

Amazon.com Inc. (Nasdaq: AMZN) is also down about 13% from its March peak, but down only 7% from its February peak, when its peers topped out.

When investors talk about cloud computing, corporate security, and other operations, they mention Alphabet, Amazon, and Apple.

However, the company they should talk about more - a lot more - is Microsoft Corp. (Nasdaq: MSFT).

In fact, Microsoft stock is one of our favorite tech stocks to buy right now...

Here's why we're so bullish on MSFT stock, and two specific ways to profit starting today...

Why We're So Bullish on Microsoft Stock Right Now

Here are three reasons Fitz-Gerald thinks Microsoft could be the first company to reach that $1 trillion market cap...

  1. CEO Satya Nadella's emphasis on cloud computing matches markets perfectly at a time when, according to Morgan Stanley, "public cloud adoption is expected to grow from 21% of workloads today to 44% in the next three years" - a figure Fitz-Gerald thinks is 10% too low.
  2. Microsoft has several cloud units, including everything serving up the Office 365 product line and Azure hosting. The company also has the popular Xbox hardware and software, as well as LinkedIn.
  3. Microsoft has a massive user base, legacy contracts, and improving margins, all of which mean better operating income and earnings ahead over time.

Note that these points are focused on the public cloud market, which will more than double to $250 billion. The private cloud market is estimated to grow at a compound annual growth rate of 31.61% over the next nine years, reaching $237 billion by 2026, according to Statistica.

Gartner, a leading consultancy and technology research firm, suggests that the "cloud shift" we're talking about could impact more than $1 trillion in IT spending within the next two years.

Combine tax cuts and stock buybacks, and Microsoft stock is poised for some serious upside.

With all those reasons in mind, here are two specific strategies to take to start profiting from Microsoft stock immediately...

Two Ways to Profit from Microsoft Now

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The easiest way to grab a piece of Microsoft's gains is to buy the stock. It currently trades near $89.71 per share, which means you'll have to shell out $8,971.00 for every 100 shares, not including commissions and fees.

Fitz-Gerald sees a 50% upside in the next 12 months, which is nothing to scoff at.

However, you can do even better...

Options-savvy investors can put leverage to work for them with long-dated options. Specifically, you can purchase Microsoft LEAPS (Long-Term Equity Anticipation Securities). And you can do it for a fraction of the cost of buying shares outright.

Specifically, Fitz-Gerald suggests the Jan. 17, 2020, $95 calls, which currently trade near $11.50, or $1,150 per contract. With LEAPS, you control the same 100 shares of Microsoft stock for about 12.8% of the cost.

If Microsoft performs as we think it will, your portfolio will thank you.

But that's not the only profit play we're bringing readers today...

Critical: FCC Approves Revolutionary Device (This Changes Everything)

A tiny company's game-changing device has just been approved by the FCC... and it's set to spark the most monumental technological transformation you'll ever see.

This is the only device of its kind to receive this historic approval, and the floodgates are set to open any minute.

With one tiny company at the heart of this revolution, even a small stake could reward you with astronomical gains.

You need to hurry if you want to find out how to take advantage of this ground-floor profit opportunity...

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