MicroStrategy Inc. (MSTR), of Tysons Corner, Va., is riding two of the most powerful growth trends in the market right now with its large ownership of Bitcoin and its recent pivot to use Artificial Intelligence (AI) to enhance its business intelligence (BI), mobile software, and cloud-based services, writes Paul Dykewicz, editor of DividendInvestor.
MicroStrategy is also one of the newest additions to the technology-heavy Nasdaq 100 Index. A key reason is that the company’s market value has soared along with its share price in the past year as an unabashed Bitcoin buyer. A stock’s price typically rises when it is included in an index, since ETFs that seek to replicate the performance of the Nasdaq 100 must purchase shares of any companies that are added.
The addition of MSTR took effect on Dec. 23, but it may not be the only catalyst that would propel the stock to lofty new heights. While it’s much too optimistic to expect MicroStrategy during the coming year to equal its one-year surge of 614.5% to $408.57 through Dec. 13, President Trump’s vocal support for cryptocurrencies should serve as a boost for Bitcoin during his administration.
On Dec. 5, Trump posted on his social media website Truth Social that attorney and entrepreneur David Sacks will guide AI and cryptocurrency policy for his second presidential term. Sacks will serve in a newly created position of “White House A.I. & Crypto Czar,” Trump wrote on Truth Social.
Sacks is a former PayPal Holdings Inc. (PYPL) executive, general partner of an early-stage venture fund, and a Silicon Valley success story. In addition, he is the co-host of a podcast “All-In,” which discusses current events and market conditions.
MicroStrategy has been an aggressive investor in Bitcoin, the world's largest crypto asset, helping to lift the company’s market value to almost $94 billion in mid-December. The company began buying and holding Bitcoin in 2020 to help compensate for slowing revenue growth from its software business. MicroStrategy held about 423,650 Bitcoins in mid-December, a hoard valued at $42.43 billion, according to Reuters.
MicroStrategy currently is the largest corporate holder of Bitcoin. As a result, the company’s share price tends to rise and fall along with the cryptocurrency. For that reason, an investment in MicroStrategy carries considerable risk and only investors who can accept that potential peril should pursue such a path. I recommend setting stop losses to protect gains in case the corporation’s fortunes falter.
