Microsoft offers the greatest potential reward for investors looking to invest in a stock over the next five-to-10 years, according to veteran investor Mark Hawtin. Hawtin, investment director at Zurich-based GAM Investments, said the Big Tech company’s dominant position and critical role in the enterprise software ecosystem make it ideal to own through a downturn in the global economy. “It is without a doubt our favorite mega-cap name,” he told CNBC’s Pro Talks Wednesday. “If you had to make an investment on a five-to-10-year view, and you weren’t allowed to change your mind, Microsoft, for me, would be the clearest risk-reward player over that period of time amongst those big companies.” Hawtin oversees several global long-only and long/short funds at GAM, which has around $80 billion in assets under management. He invests in disruptive growth and technology stocks. MSFT 1Y line In a wide-ranging discussion with CNBC’s Joumanna Bercetche, Hawtin also indicated that Microsoft would buck the trend among its peers and report an increase in earnings this year. He’s not alone in that view. FactSet data shows that analysts expect a 2% increase in earnings per share this year for S & P 500 companies in aggregate, compared to the 8.5% rise in EPS expected from Microsoft. According to Hawtin, Microsoft will outperform the wider market as it has a diverse revenue stream. He said the Redmond, Washington-headquartered company, will continue to see growth in sales since it is integral to many of its customers’ technology. For example, millions of businesses worldwide use Microsoft Windows, Office 365, and its cloud computing platform Azure as the backbone of their IT infrastructure. These systems either do not have an equivalent competitor or are difficult to immediately replace. “I think one of the key things about understanding Microsoft is, they are so ingrained and embedded in so many companies,” Hawtin said. This unique ability also means it will capitalize on advances in artificial intelligence more profitably than other companies that focus solely on A.I., according to Hawtin. “In just the same way as Teams as a video conferencing opportunity compared to Zoom as a standalone business,” he added. Microsoft bundles its workplace collaboration software Teams with Office 365, hitting growth at rivals Zoom and Slack, which is owned by Salesforce. Over a multi-decade period, the company’s stock has also been among the top 10 largest companies in the S & P 500 more times than any other company, according to Hawtin. “There are many companies that have tried to eliminate Microsoft without success,” he added.
