Few stocks have created the type of wealth Microsoft has. Since going public in 1986 -- and accounting for all of the stock splits and dividends that have come in between -- shareholders have enjoyed gains of 12,940%.
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Those are the types of returns that can change the financial future of not just one family, but generations within a family.
But when we look at the stock's performance over a few different timelines, we find that there are other stocks that surprisingly can put Microsoft's returns to shame. Read on to find out how our Foolish investors think Amazon.com (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Netflix (NASDAQ: NFLX) have accomplished that feat, and what it means for shareholders.
Since going public, this company has smashed Microsoft's results
Brian Stoffel (Amazon.com): There's no doubt Microsoft is one of the great investments of our time. But if we start tracking stock returns from the time Amazon went public in May 1997, we see that it has absolutely obliterated Microsoft's track record.
It's important to note, too, that these returns include over a decade's worth of dividends Microsoft has paid.
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Of course, that isn't to say Microsoft has been a bad investment. The big difference is that Amazon went public in the middle of the dot-com bust, meaning Microsoft's price was already inflated in 1997, and it was harder to produce huge gains from there.
But perhaps the biggest lesson here for investors is about optionality and leadership. Amazon's mission from the get-go has been to become "Earth's most customer-centric company." Founder and CEO Jeff Bezos has been at the helm all along, guiding the company with this focus, and expanding into ever more industries to fulfill this mission.
Microsoft's goal was much narrower: "A computer in every home, and on every desk." The company no doubt played a huge role in making that goal come true, but with fewer avenues for growth and founder Bill Gates stepping down as CEO all the way back in 2000.
While these two differences alone can't explain all of the difference in stock returns between the two, they highlight the major differences between the underlying businesses and their evolution over the past two decades.
The product that defined a decade
Travis Hoium (Apple): Microsoft has done a commendable job turning around its business in the past few years, becoming a major player in cloud computing and software as a service. But it missed out on the biggest tech opportunity in the past decade: smartphones. Apple took the opening Microsoft and others left, creating a product, the iPhone, that has defined a generation.
From a stock return standpoint, Apple's 592% gain over the past decade puts Microsoft's 189% jump to shame, and Apple became a more valuable company in the process. It doesn't appear that the tides will turn anytime soon, either.
Apple has built an ecosystem of products that work seamlessly together and stack hardware with services. At the center is the iPhone, which can be leveraged to sell Macs, Apple Watches, AirPods, Apple TVs, and content from iTunes, the App Store, and iCloud. It's a very sticky business model that shows no sign of giving way to other tech companies.
There's no guarantee that Apple will dominate the next product cycle the way it did with smartphones, but the company's scale and ecosystem will be a big advantage for the next decade as well. I'm certainly not giving up my gains in Apple to move into Microsoft stock.
A video streaming giant
Keith Noonan (Netflix): Since going public in 2002, Netflix has seen its split-adjusted share price increase more than 16,300%. Microsoft's total return price over the same stretch comes out to roughly 350%. Of course, this frame of comparison is very favorable to Netflix, but even if you had bought and held shares of Microsoft in 1992, its impressive total return of roughly 5,270% would still fall short of Netflix's gains in a decade less time.
Netflix has laid the groundwork for a global video streaming empire, and it looks as if its growth story still has enriching chapters ahead. The company's platform is now available in over 190 countries, and with much of the costs associated with entering these markets and building infrastructure already in the rearview mirror, it has a huge opportunity for profitable sales growth. So that's certainly something to be excited about and a big factor in the stock's gains over the past couple of years, but there are other growth avenues that could open up for the streaming company.
Netflix has already started employing one of its most successful original properties to test the waters for ventures outside its core competency. Stranger Things sweaters and T-shirts might not sound like something investors should be excited about, but the merchandising push marks one of Netflix's first forays into the consumer-products space and hints at a bigger multimedia empire that could play an important role in its evolving growth story.
With its core business looking strong and viable opportunities to continue expanding its media empire, Netflix still has upside despite its tremendous gains.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Brian Stoffel owns shares of Amazon, Apple, and Netflix. Keith Noonan has no position in any of the stocks mentioned. Travis Hoium owns shares of Apple. The Motley Fool owns shares of and recommends Amazon, Apple, and Netflix. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.