Someone forgot to tell investors that Microsoft is doomed

By Chris O’Brien

May 29, 2013 12 AM PT

Looking for one of the hottest tech stocks this year? Here’s a candidate that might surprise you: Microsoft.

Since Jan. 10, Microsoft’s stock is up about 30%. On that day, the stock closed at $26.46. In midday trading on Wednesday, the stock was at $34.27.

The more interesting question: Why?

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After all, the popular narrative surrounding the company is that Windows 8 has been a disappointment. That not only did Windows 8 not reignite sales of PCs, but in the first quarter PC sales fell even faster. And then there’s criticism of Surface Pro tablet sales. And questions about whether Windows Phone 8 is getting traction.

And even more recently, there’s been some mixed reviews of the new Xbox. And then there’s ongoing questions of whether chief executive Steve Ballmer should get the boot.

Is it possible that all of this doom is overstated? Is it just possible that Ballmer has Micrososft headed in the right direction, despite some stumbles related to the Internet and mobile along the way?

Investors certainly seem to think so.

To put the recent stock climb in perspective, it is now trading close to the most recent high of $36.81 that it reached in October 2007.

Before that, you’d have to go back to June 2001 to find the stock in this territory, when it hit $36.50. The only time the stock was higher than those peaks was during the dot-com frenzy, rising as high as $58.38 in December 1999.

There may be no one explanation for the sudden love from investors. It’s worth noting that while PC sales have collapsed, Microsoft’s earnings have not collapsed with them. And while Windows 8 may not have met expectations, the company is rumored to be planning some changes, such as possibly reintroducing the Start button and allowing users to boot directly to the classic desktop version rather than the tile-based look.

On Twitter, Alex Wilhelm of The Next Web noted a couple of other possible factors:

@obrien Strength of several new products, Windows Phone’s rising tide, and the fact that Windows 8 will be fixed — Alex Wilhelm (@alex) May 29, 2013

@obrien MSFT’s enterprise products will drive rev growth as the company sorts out its consumer-facing OS issues — Alex Wilhelm (@alex) May 29, 2013

Office 365 passed 1m subscribers in just over 100 days, making it the best-selling Office yet tnw.to/p4lE tip @techmeme — Alex Wilhelm (@alex) May 29, 2013