This article was originally published on Opto – Invest in the Next Big Idea.
Until the end of March, the Microsoft share price failed to clock significant gains, but after closing at $231.85 on 30 March it had a rapid surge of 7.4% to close at $249.07 on 5 April. The Microsoft share price made steady gains until 27 April when it closed at $261.97 before a poor run saw it close 12 May 8.8% down at $239.
Since then, however, a sustained run has seen the Microsoft share price gain 16.5% to hit its 6 July level. This leaves the Microsoft share price 32.2% above its level 12 months ago.
Microsoft’s Mancunian journey
The Microsoft share price has been boosted by a partnership with Manchester-based vehicle data startup Wejo.
In the long run, the partnership could see Wejo (a contraction of “we journey”) integrated into Microsoft’s data platform, permitting business sharing, analytics, artificial intelligence and machine learning. According to the press release that announced the partnership, both companies share a “respect for and total commitment to data privacy and security”.
Explaining the reason for the partnership Richard Barlow, founder and CEO of Wejo, said: “Microsoft came up with a really compelling solution about how we can leverage their machine learning and AI capabilities to actually provide even more incredible products back to OEMs [original equipment manufacturers] and key industries that want to use connected vehicle data,” “So Microsoft’s [cloud computing service] Azure doing that heavy lifting is really going to speed up our business.”
Wejo collects 16 billion data points daily from a network of 11 million live vehicles. Wejo has taken in more than 10 trillion data points to date, and Microsoft Azure’s data management capability will assist it in handling data on this kind of scale
“Connected vehicle data creates the potential to drive broad transformation across industries,” Sanjay Ravi, general manager of automotive, mobility and transportation industries at Microsoft, said.
“With Wejo’s extensive and growing data assets on Azure, together we have the opportunity to help customers make better business decisions, provide differentiated customer experiences, find new revenue streams and drive future innovation,” he added.
The partnership is initially likely to focus on areas such as traffic and insurance solutions, remote diagnostics, integrated payments, advertising, retail and logistics. There is also thought to be scope to utilise Wejo data for Microsoft’s mapping solutions.
Wejo has entered a separate partnership with software company Palantir [PLTR] and global insurance provider Sompo Holdings [TYO.8630], under which Sompo will analyse Wejo’s connected vehicle data using Palantir’s Foundry platform.
Wejo is the subject of an upcoming merger with special purpose acquisition company Virtuoso Acquisition Corp, and as part of the associated PIPE financing Microsoft and Sompo have agreed to a $25m combined investment in Wejo. The news was announced on 29 June, and saw the Microsoft share price gain 1%.
Big tech or next-gen?
The Microsoft share price is a key driver of the market’s broader big tech theme, and the stock forms a key holding in many of the sector’s largest ETFs.
It is the second-largest holding in the Invesco QQQ Trust [QQQ], which tracks the Nasdaq Index, at 9.5% of the fund’s value as of 9 July. The ETF has gained 13% in 2021 to date, and 41% over the past 12 months.
Microsoft is also the second-largest holding in the iShares US Technology ETF [IYW], with the fund weighted 17.6% towards the Microsoft share price as of 7 July. The ETF also carries Palantir, though the stock is way down the list in 104th position (out of 164) and 0.1% of the fund’s weight.
The fund has grown 16.9% in the year to date, and 46.9% in the past 12 months.
This performance is similar to that of the Invesco QQQ Trust, and both have underperformed the ARK Next Generation Internet ETF [ARKW]. The fund has from 72% over the past 12 months. The ETF does not hold Microsoft but holds Palantir as the 19th largest holding at 1.79% of the fund (as of 7 July) — a result of its focus on newer growth stocks as opposed to established big tech firms. The ETF’s growth of 3.4% through 2021, however, suggests that established big tech has had a better run of late than new challengers.
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