Invest in Microsoft and Netflix for long-term growth potential in subscription-based models.
From Yahoo Finance: 2025-05-05 12:38:00
Subscription-based businesses like Microsoft and Netflix are thriving. Microsoft has over 1 billion Windows users and growing revenue from subscription-based software services. Netflix just hit 300 million paid memberships, with double-digit growth. Investing in top companies like these can lead to excellent returns, especially those with recurring revenue models like subscriptions. Microsoft is a strong business, generating revenue from subscriptions like Azure and Microsoft 365, posting a 20% year-over-year growth to $42 billion last quarter. Its partnership with OpenAI has been a growth driver, with Azure cloud business revenue growing 33% year over year. Microsoft is positioned to be a leader in AI. Netflix reported a 12% revenue increase year over year in Q1, with guidance for 15% growth in Q2. The company’s focus on new content and a subscription-based model is driving growth in paid memberships. With $17 billion spent on new content last year, Netflix remains highly profitable with a 25% profit margin. Analysts expect earnings to grow 23% annually over the next several years. Before investing in Microsoft or Netflix, consider other top stock picks from Motley Fool’s Stock Advisor team. They have identified the 10 best stocks for investors to buy now, offering potential for substantial returns in the future.
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