A quick glance at its share price graph leaves me cursing myself for not snapping up Microsoft (NASDAQ: MSFT) stock five years ago.
Multi-bagger!
As I type, the shares have rocketed over 260% since November 2018. So a £1,000 investment would now be worth roughly £3,600.
I say ‘roughly’ because this doesn’t take into account any costs that would have been incurred when buying. To keep things simple, I haven’t added in the (small) dividends shareholders would have received in this period either.
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Not that this really matters. Even the most demanding Fool would likely regard this as a fantastic result.
The tech-heavy Nasdaq index has ‘only’ doubled in value. The S&P 500 index has managed ‘just’ 73%. And the old-economy-focused FTSE 100? It’s up a woeful 8% in those five years.
Rollercoaster ride
Naturally, no stock goes up in a straight line. Like many of its sector peers, Microsoft enjoyed a huge surge of positive momentum during the pandemic as gadget usage soared and working from home became the norm.
However, it also endured a tricky 2022 as inflation jumped, interest rates galloped upward and value stocks became more attractive. Between January and November of that year, the shares fell around 35%.
Having now fully recovered (and then some), it’s easy to overlook this volatility and how I might have felt if I’d held the stock at the time.
The lesson here is that any ‘winner’ can easily come unstuck due to factors beyond its control.
Thinking otherwise is just the sort of thing that gets a long-term investor in trouble.
The robots are here
On a more optimistic note, the fact that so many of us continue to use its operating system, cloud services and gaming on a daily basis makes it hard for me to bet against Microsoft for the foreseeable future.
Last week’s announcement that former Open AI CEO Sam Altman would head up the former’s “new advanced AI research team” was another interesting development. Too bad it’s no longer going to happen. As the man who brought ChatGPT to the masses, Altman is clearly well-regarded by those in the industry.
Then again, I don’t think the appointment would necessarily have worked. Altman’s integration would have been tricky given that he previously voiced concerns about the dangers of ‘big tech’ taking over AI.
Attempting to predict the precise trajectory of AI from here also feels pretty redundant. The pace of development is simply too rapid.
Notwithstanding this, I’m sufficiently convinced that this technological revolution is not something that I can ignore as an investor.
Conveniently, this brings me back to where I started.
Pull-back ahead?
If there’s one silver lining to missing out on Microsoft’s incredible gains directly, it’s that I’ve had exposure of sorts via several funds held within an ISA, one of which is devoted to AI.
While this hasn’t delivered quite the same gains, taking a diversified approach fits my risk tolerance and allows me to sleep at night.
I’m certainly not about to reduce my exposure to this sector any time soon. Whether I’d buy Microsoft stock today is a different matter.
With a market-cap approaching $3trn, I wouldn’t be surprised if there was some kind of pull-back before long.
