Is Microsoft Corporation (MSFT) the best video conferencing stock to buy, according to analysts?

by Junna Base November 12, 2024

We recently published a list The 8 Best Video Conferencing Stocks to Buy According to Analysts. In this article, we take a look at where Microsoft Corporation (NASDAQ:MSFT) stands compared to other best video conferencing stocks to buy, according to analysts.

Video conferencing software connects two or more participants virtually via video and audio over an Internet connection. During the COVID-19 pandemic, when lockdowns closed almost everything, the video conferencing market saw a surge in demand. According to a report by Grand View Research, the video conferencing market was valued at around $4.21 billion in 2020 and the value increased significantly to around $7 billion in 2022. Furthermore, the latest figures show. The video conferencing market was valued at $28.61 billion in 2023 and is expected to grow from $33.04 billion in 2024 to $60.17 billion in 2032, at a compound annual growth rate of 7 .8% corresponds.

According to a BBC report published on June 3, 2020, usage of the video conferencing platform Zoom increased 30-fold in April 2020 alone during the pandemic. The report also highlighted that daily subscriber usage exceeded 300 million users during the peak of the pandemic.

READ MORE: The 10 Best Internet Retail Stocks to Buy Now and the 8 Best Industrial Stocks to Buy, According to Analysts.

Initially, market growth was driven by the pandemic and lockdowns around the world, which forced companies, government organizations and educational institutions to adopt virtual forms of engagement. For example, the World Health Organization (WHO) held its first virtual meeting in May 2020. Additionally, educational institutions used video conferencing software to conduct graduation ceremonies.

Now that the world has returned to normality, we are quickly moving into the post-pandemic era: the video conferencing market is driven by the increase in remote jobs and e-learning. According to a Pew Research report published on March 30, 2023, approximately 35% of the U.S. workforce worked remotely in 2023. However, that number was down from the 43% in January 2022 and 55% in October 2020, so the pandemic era still saw a 7% increase in the proportion of remote workers compared to pre-pandemic years.

Looking at the regional insights, North America held the largest market share at around 31% in 2023 as it benefits from the large organizations engaged in video conferencing software development. In addition, the region also has an experienced workforce capable of implementing remote work. Besides North America, the Asia Pacific region is expected to witness the fastest CAGR growth due to growing interest in digitalization among businesses, governments and educational institutions.

Looking ahead, the rise and recent developments in artificial intelligence, Internet of Things and cloud technologies are expected to further boost the video conferencing market. According to a World Economic Forum report, digital jobs worldwide are expected to increase by around 25% to over 95 million, highlighting the growth prospects for video conferencing software due to its indispensable position for remote working organizations.

To create the list of the 8 best video conferencing stocks to buy according to analysts, we used various internet rankings and our previous articles. We compiled a list of the video conferencing companies most commonly owned by hedge funds based on Insider Monkey’s hedge fund database for the second quarter of 2024. Next, we checked the analyst upside potential for each CNN stock and ranked our stocks in ascending order Order of their upside potential. Please note that the data was collected on November 8, 2024.

Why do we care what hedge funds do? The reason is simple: Our research shows that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, outperforming its benchmark by 150 percentage points (Further details can be found here).

Is Microsoft Corporation (NASDAQ:MSFT) the Best Video Conferencing Stock to Buy, According to Analysts?

Antonio Guillem/Shutterstock.com

Number of hedge fund owners: 279

Analyst Upside Potential: 21.52%

Microsoft Corporation (NASDAQ:MSFT) is a leading technology company that develops a broad range of software, services, devices and solutions. Its offerings span multiple segments including productivity and business processes, intelligent cloud and more personal computing.

The company is known for Microsoft Teams in the video conferencing sector. Not only does the platform allow users to host meetings from anywhere and supports both in-person and remote participants, but it also supports breakout rooms for smaller group discussions. Teams can accommodate up to 300 participants in a single meeting, with expanded plans allowing webinars with up to 10,000 participants.

In addition to basic video conferencing features, Microsoft Teams seamlessly integrates with other Microsoft 365 applications, including Word, Excel and PowerPoint. This integration allows users to easily share files during meetings and collaborate on documents in real-time.

Microsoft Corporation (NASDAQ:MSFT) released its first quarter fiscal 2025 results on October 30, which showed revenue growth of 16% and earnings growth of 11% year-over-year. The Productivity and Business Processes segment, which operates commercial Microsoft 365 products and Microsoft Teams, contributed significantly to the revenue growth. Segment revenue was $28.3 billion for the quarter, up 12% year-over-year.

According to analysts, Microsoft Corporation (NASDAQ:MSFT) is one of the best video conferencing stocks to buy.

Baron Opportunity Fund stated the following about Microsoft Corporation (NASDAQ:MSFT) in its report. Investor letter Q3 2024:

“Microsoft Corporation (NASDAQ:MSFT) is the world’s largest software and cloud computing company. Microsoft has traditionally been known for its Windows and Office products, but over the past five years it has built a $147 billion cloud business, including its Azure cloud infrastructure service and its cloud-delivered Office 365 – and Dynamics 365 applications. Shares gave back some gains due to strong performance in the first half of this year. For the fourth quarter of fiscal 2024, Microsoft reported a strong quarter with overall revenue growth of 16%, according to the Street; Microsoft Cloud rises 22%; Azure up 30%; 43% operating profit margin; and 36% free cash flow margins. However, Azure’s core growth fell one point below expectations due to a weak European market and ongoing limitations in AI computing capacity. Even as Microsoft reiterated its targets for double-digit revenue and operating profit growth for fiscal 2025, quarterly forecasts called for Azure growth to slow somewhat before accelerating in the second half of the fiscal year as capital spending increases. This leads to an expansion of AI computing capacity. We believe this investment is a leading indicator of growth as more than half of the expenditure is on permanent land and data center build-outs, which are expected to pay off over the next 15+ years. We remain confident that Microsoft is one of the best positioned companies in the overlapping software, cloud computing and AI landscapes, and we remain investors.”

Total MSFT takes 3rd place on our list of the best video conferencing stocks to buy, according to analysts. While we recognize MSFT’s growth potential, we believe AI stocks have more promise for delivering higher returns, and within a shorter time frame. If you’re looking for an AI stock that has more promise than MSFT but trades at less than 5 times earnings, check out our report on it cheapest AI stock.

READ MORE: The 8 Best Wide Moat Stocks to Buy Now And The 30 most important AI stocks according to BlackRock.

Disclosure: None. This article was originally published at Insider monkey.

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