The investment bank says the tech giant has 'full geographic coverage across all industry verticals,' making it less susceptible to downturns in any one sector.
Microsoft could act as a defensive stock if the U.S. enters a mild recession next year, according to UBS analyst Karl Keirstead. The investment bank's economics team forecasts a mild recession in the United States next year, which could pressure broader equity markets. "I would definitely characterize Microsoft as more defensive rather than cyclical," said Keirstead, managing director of software equity research at UBS, in a video recording to clients on Oct. 13.
line Microsoft also relies heavily on recurring subscription revenues, not "episodic revenue recognition events that can get hurt or rally" along with the economy, he added. Microsoft cloud and productivity services, which include the Azure Cloud Computing platform and Office 365, had risen to 74.2% of total revenue in June, up from 56% in 2016, according to FactSet data. The more cyclical personal computing revenue shrank from 44% of total sales to just 25% today.
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