Not too long ago, Microsoft (MSFT) stock's glory days looked to be behind it as sales of desktop PCs slipped into a seemingly irreversible decline amid the consumer shift to mobile technology. Although the dot-com days of the 1990s minted many a "Microsoft millionaire," the aftermath of the tech bust led Microsoft stock to trade mostly sideways for more than a decade.
But the past 10 years have been nothing short of a renaissance for the software giant. When CEO Satya Nadella ascended to the top job in 2014, he not only began instituting cultural changes, he transformed Microsoft's core strategy too. Cloud computing and subscription-based services were in; the days of selling software licenses via physical compact disks were passé.
That focus on enterprise customers and – most importantly – Microsoft's shift to selling cloud-based services such as Azure and Office 365 have been an astounding success. Today, Microsoft is a dominant player in cloud computing – and MSFT's stock price proves it.
Indeed, Microsoft stock has been so remunerative since Nadella took over that long-term investors might not even notice that dud decade-plus following the tech bust. Between January 1990 and December 2020, shares in Microsoft, which joined the Dow in 1999 at the height of the dot-com boom, generated a total return of 57,730%. The S&P 500's total return came to a mere 1,950% over the same span.
Along the way, Microsoft stock generated $1.91 trillion in wealth for shareholders, good for an annualized dollar weighted return of 19.2%, according to Hendrik Bessembinder, professor of finance at the W.P. Carey School of Business at Arizona State University.
Only Apple (AAPL) generated more wealth for shareholders over those three decades, making MSFT one of the very best stocks of the past 30 years, per Bessembinder's findings, which account for cash flows in and out of the business and other adjustments.
The bottom line on Microsoft stock
(Image credit: YCharts)
With Microsoft trading at fresh all-time highs, it seemed like a good time to see what $1,000 invested in Microsoft stock 20 years ago would be worth today.
Have a look at the above chart and you'll see that if you put a grand into MSFT stock two decades ago, today it would be worth more than $24,000. The same amount invested in the S&P 500 20 years ago would theoretically be worth almost $6,500 today.
Over its entire life as a publicly traded company, MSFT stock has generated an annualized total return (price change plus dividends) of more than 26%. The S&P 500's total return comes to 10.3% over the same period. Analysts very much expect Microsoft stock to continue to generate market-beating returns.
Of the 55 analysts issuing opinions on Microsoft stock surveyed by S&P Global Market Intelligence, 39 call it a Strong Buy, 13 say Buy and three have it at Hold. That works out to a consensus recommendation of Strong Buy, making MSFT a top-rated name among Dow Jones stocks.
Have a look at the above chart and you see only market-matching returns until around 2015. Then MSFT takes off. Indeed, it took off so much that if you put a grand into Microsoft stock two decades ago, today it would be worth about $25,500.
2024, the S&P 500 has posted an average annual return of 9.74%, right about in line with its long-term average. Here's how much you would have now if you invested in the S&P 500 20 years ago, based on varying starting amounts: $1,000 would grow to $2,533. $5,000 would grow to $12,665.
Microsoft's return is even more impressive than Apple's, as it turned $1,000 invested in its 1986 IPO to $4.1 million now. However, Microsoft's stock ride was rather bumpy, as its stock turned $1,000 into nearly $600,0000 by the turn of the century.
What does that look like on a brokerage statement? Check out the above chart and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth almost $460,000. The same $1,000 invested in the S&P 500 would theoretically have turned into about $7,000 over the same period.
For Nvidia, if you bought shares a decade ago, you're likely feeling really good about your investment today. A $1000 investment made in May 2014 would be worth $201,950.68, or a gain of 20,095.07%, as of May 7, 2024, according to our calculations. This return excludes dividends but includes price appreciation.
This chart illustrates the disconcerting fact that if you invested $1,000 in Walmart stock 20 years ago, today it would be worth only about $5,300. The same thousand bucks invested in an S&P 500 ETF would be worth somewhere in the neighborhood of $7,200 today.
If I really wanted to impress you with big numbers, I'd point out that a $1,000 Amazon stake on the date of its initial public offering (IPO) in 1997 would have grown to $1.6 million by now.
If you had invested $1,000 in Apple stock on Feb. 4, 1997, today, you would have $1,343,269. Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $11,038. A similar $1,000 investment in an index fund that replicates the S&P 500 would be worth $6,140.
A $20,000 investment made in the semiconductor giant 10 years ago would be worth more than $3.4 million today -- up by around 170 times in value. It is also worth noting that the company has taken less than a decade to turn a $20,000 investment into precisely a $1 million.
To be or not to be is still a question. While it is theoretically possible for Apple's stock to reach $1000 per share in the future, this would depend on sustained strong financial performance, successful penetration and expansion in new markets, and a favorable economic environment.
In the year since Nvidia's boffo Q1 FY 2024 report released in May 2023, the company's stock has risen 248%. Nvidia stock — after splitting 10-for-1 early in June — could rise from $100 to $1,000 by 2026.
If you had invested $1,000 in Google stock on Aug. 19, 2004, today, you would have $60,107. Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $9,000.
Those gains translate to a 36.6% compound annual growth rate for Apple compared to a 7.4% CAGR for the S&P 500 in that time. That means that $10,000 in AAPL stock purchased 20 years ago would be worth about $5.08 million today, assuming reinvested dividends.
In 1980, had you invested a mere $1,000 in what went on to become the top-performing stock of S&P 500 (^GSPC 0.18%), then you would be sitting on a cool $1.2 million today. That equates to a total return of 120,936%. The stock? None other than Gap (GPS -0.31%).
Introduction: My name is Frankie Dare, I am a funny, beautiful, proud, fair, pleasant, cheerful, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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