Microsoft’s Big Malaysia Bet Could Pay Off for Investors

Key Points

• Microsoft announced the launch of its Malaysia West cloud region, one of the latest examples of its ongoing commitment to the country’s cloud and AI ambitions.
• In contrast, the company also recently announced it was backing away from an undisclosed number of data centers in the U.S. and Europe.
• Both examples highlight the company’s strong commitment to shareholder value.

On March 20, 2025, Microsoft Corporation NASDAQ: MSFT reaffirmed its commitment to launch the company’s Malaysia West cloud region, which is expected to go live in the current quarter. This will be the first cloud region in the country and is part of a previously announced commitment to advance Malaysia’s cloud and AI economy.

It’s a significant milestone in Microsoft’s 33-year history of supporting Malaysia in its journey toward digital innovation and inclusive economic growth. In addition to the infrastructure investment, Microsoft chairman and chief executive officer (CEO) Satya Nadella announced an additional $2.2 billion investment to spur the country’s cloud and AI ambitions.

The announcement is an interesting juxtaposition to Microsoft’s recent announcement that it won’t be moving forward with an undisclosed number of data center projects in the U.S. and Europe. However, it's clear that Microsoft will continue to spend what it takes to compete in its various business segments. It also shows shareholders that the company is keeping an eye on its bottom line.

Investors Reward Microsoft’s Strategy of Strengthening Core Advantages

If Microsoft has any weaknesses, its cloud computing segment isn’t one of them. In the latest quarter, cloud revenue grew about 30%—more than double the company’s overall growth of 12.4%.

Between now and 2028, Microsoft is forecasting its Malaysian investment to bring in $10.9 billion in new revenues from the company, its partners, and its cloud-using customers. The tech giant is also forecasting the investment to create 37,575 new jobs, of which 5,700 will be highly skilled IT jobs.

Investors like to see an example of a company strengthening one of its strengths. That’s particularly true of a company like Microsoft, which has a 24% return on invested capital (ROIC).

Cutting Back on CapEx

Despite Microsoft’s strong and profitable return on capital expenditures, it’s somewhat ironic that rising CapEx is one reason investors have cooled on MSFT stock over the past nine months.

In 2024, the company’s total capital expenditures totaled over $50 billion, with most of that being in AI infrastructure (e.g., data centers). As recently as the company’s January 2025 earnings report, Microsoft defended the spending, saying that it was necessary to keep up with the strong demand from its customers. The company forecasts a lengthy period where supply will be unable to keep up with demand.

However, in announcing that it was stepping back from some data center projects, it cited an oversupply relative to current demand. As much as investors like to see companies like Microsoft continue to invest in growth, they also like to see a company step back from its plans to preserve shareholder value.

Microsoft Remains a Solid Long-Term Buy

Like many technology stocks, Microsoft's stock has been down for the year. It’s down about 6% as of March 26, 2025. However, compared to some of the other Magnificent Seven stocks, MSFT stock has held up rather well.

Even going back to its all-time high set in July 2024, the stock is “only” down about 16%; that’s not bear market territory.

Yet this seems to be an example of where investors may not have the luxury to wait for a bigger dip. MSFT stock looks to have found support around the $390 level. That correlates with where the stock was in January 2024.

The stock is also trading near its 20-day simple moving average (SMA) and is less than 10% below its 50-day, 100-day, and 200-day SMAs.

The Microsoft analyst forecasts on MarketBeat certainly agree, giving Microsoft a consensus price target of $510.59, a 31% increase for investors. This is in addition to the company’s dividend, which has increased in each of the last 23 years.