Three Reasons to Buy This Magnificent Seven Stock and Hold on to it Forever

Buy-and-hold forever is a bold generalization, as few stocks are worth the obsession. However, the technology groupMicrosoft (NASDAQ resonance code: MSFT)It is one of the few stocks worth considering.

This can be summarized as a combination of past performance and future opportunities, as well as an excellent financial position that is hard to beat. I will analyze this in more detail in the following pages.

That's why you should buy Microsoft stock and hold it indefinitely.

Let's take a deeper look.

Microsoft is characterized by the convergence of multiple businesses.

The company's history dates back to the dawn of the personal computer. Today, the operating software known as Windows is still the dominant software, and a number of other key businesses contribute to Microsoft's revenues. Microsoft's products and services are organized into three business units:

• Productivity and business processes:Microsoft 365 software, LinkedIn, Microsoft Dynamics.

• Smart Cloud:Azure, Cloud Services, Enterprise Services.

• More personal calculations:Windows software, games, Bing, and Edge.

Microsoft has established a number of products as top (or hybrid) competitors in a variety of industries. windows still holds 72% of the desktop operating system market, and its 365 suite of software is well entrenched in the enterprise world. azure is the world's second-largest cloud platform, with 23% of the global share. it is dominant in PC gaming and one of only a few makers of gaming consoles. Azure is the world's second largest cloud platform, with a global share of 23%.

This means that Microsoft has sales of $227 billion and free cash flow of $67 billion. This cash flow makes Microsoft a true dividend growth stock. Despite being valued at nearly $3 trillion, the company's business is still growing at a mid-single digit rate. For the second quarter ended December 31, Microsoft's total revenue grew 18% year-over-year.

It's a key player in the future of artificial intelligence

Microsoft's rise to technological dominance is no accident, and it takes vision and execution. It takes vision and execution, and Microsoft has demonstrated that skill again through its partnership with OpenAI carpet, the creator of ChatGPT, which caused a sensation last year, but Microsoft's carpet begins in 2019. This relationship has already blossomed, making Azure the exclusive cloud provider for OpenAI workloads.

This is a huge development opportunity, as OpenAI, led by Sam Altman, is expanding with new projects, including Sora, a text tweaking engine, and a learning-agent robot developed through a partnership with robotics company Figure.

Microsoft has also unveiled Copilot, an artificial intelligence (AI) digital assistant, which could wizards to the Alphabet Its Google has dominated the traditional search engine model for two decades. How much of an impact this will have on Microsoft's growth remains to be seen, but if AI really is a major opportunity, Microsoft is well-prepared.

Financials made of iron

Every company faces adversity at one time or another. How well a company prepares for adversity determines which stocks will be dumped and which will be held. Microsoft is arguably the most financially sound company out there. Why? Few companies generate $67 billion in cash flow, and in the case of Microsoft, it exceeds the annual sales of most companies.

Professionals agree. Microsoft is rated AAA by the major credit companies that rate the company's debt. Only two other companies in the world have such a rating.JohnsonThe company. This rating even exceeds that of the U.S. government, which can indirectly print unlimited amounts of money through the Federal Reserve.

If the government's finances were to collapse, our equity portfolio would probably be the least of our worries. Microsoft's high credit rating is a testament to its strength. Only the best companies justify buying and holding forever, and Microsoft is one such company.

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Alphabet executive Suzanne Frey is a member of The Motley Fool's Board of Directors, and Justin Pope has no position in any of the stocks mentioned above. the Motley Fool has recommended Alphabet and Microsoft. the Motley Fool recommends Johnson & Johnson, and recommends the following options: a January 2026 $395 call option long on Microsoft and a January 2026 $405 call option short on Microsoft. the Motley Fool has a disclosure policy. The Motley Fool has a disclosure policy.

3 Reasons You Can Buy This "Magnificent Seven" Stock and Hold It Forever was originally published by The Motley Fool.