If I could only buy $1 trillion worth of stock in one company through the end of 2025, I’d choose this excellent growth stock

Microsoft is even buying back more than enough stock to offset the stock-based compensation. As you can see in the following chart, the country has delivered consistent and significant increases in its dividend over the past decade and reduced its share count by 9.6%, despite the rapid expansion of its share-based compensation, which for the first time in surpassed $10 billion in the fiscal year. 2024.

Perhaps most importantly, Microsoft has more cash, cash equivalents and marketable securities than debt on its balance sheet. It ended fiscal 2024 (ended June 30) with $18.32 billion in cash and cash equivalents, $57.23 billion in short-term investments such as marketable securities, and only $42.69 billion in long-term debt.

Too often, investors focus on the quantity of companies’ revenues and profits without determining whether those results are sustainable. There are countless examples of companies that have developed a hit product that has contributed to incredible results. But the product turns out to be a fad, demand drops, results plummet and the company can’t score another big idea.

Whether the product is surpassed by a better alternative: think Apple replaces BlackBerry, Netflix surpassing Blockbuster, or simply the shift to online sales that pushed companies like RadioShack out of business.

Microsoft may have the best position of any company worth over $1 trillion because it does so many different things so well: Microsoft Cloud, Windows, commercial and consumer products for the office, LinkedIn, Xbox content and services powered by Activation Blizzard, owned by Microsoft, server products, devices, enterprise services and more.

Here’s a look at Microsoft’s fiscal 2024 results by segment.

Data source: Microsoft.

Ten years ago, Microsoft earned $86.83 billion in revenue and $27.9 billion in operating income. So while sales have only increased 161.9% over the past decade, operating income has almost quadrupled. The Intelligent Cloud business alone is generating more revenue and nearly doubling operating income than the company as a whole recorded a decade ago.

Microsoft faces competition in all its segments, but the company is doing an excellent job developing new tools that can be used across the business. Copilot, and AI in general, are great examples of how it has deployed a similar solution across its segments and improved them all.

In short, it would take a lot to damage the structural integrity of Microsoft’s earnings profile. So while you might say the stock looks expensive at 37.1 times earnings, the quality of those earnings and the ability to grow earnings through multiple segments and share buybacks makes it a much better value than seems at first glance.

For these reasons, Microsoft stands out as the company with the best balance of risk and potential reward, valued at over $1 trillion.

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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Apple, Microsoft and Netflix. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has one disclosure policy.

If I could only buy $1 trillion worth of stock in one company through the end of 2025, I’d choose this excellent growth stock was originally published by The Motley Fool