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HoloLens Creator’s Departure Won’t Derail Microsoft’s Metaverse Ambitions

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Microsoft Corporation (NASDAQ:MSFT) had a head start on the metaverse, the next big thing that could prove to be a multi-trillion dollar opportunity in less than a decade. The company revealed its HoloLens AR headset back in 2016. In 2019, the company launched a second generation HoloLens 2, aimed at the commercial market. In 2021, Microsoft landed a nearly-$22 billion contract to supply HoloLens 2 headsets to the U.S. Army. However, MSFT has stayed fairly flat on both pieces of news.

As you might expect, a deal of that size was a win for MSFT stock. Even more so because it involved futuristic technology instead of a bunch of Office or Windows subscriptions. This showed the future of Microsoft and confirmed the company as a big player in the metaverse — even if the metaverse term hadn’t really entered business vocabulary at that point.

That makes Wednesday’s news disconcerting. Alex Kipman, a 20-plus year Microsoft employee and creator of the HoloLens, is leaving the company. Kipman has been accused of inappropriate behavior, including misconduct against female employees. According to CNBC, Microsoft has indicated it will reorganize the Mixed Reality team and is weighing whether to continue HoloLens development.

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For some investors, this may be a concerning moment, an apparent obstacle in Microsoft’s metaverse ambitions. It may be embarrassing, but it is not the problem some think it is. With MSFT stock down almost 19% in 2022, this is a good time to buy it on the cheap. Growth will return and keep going, with the metaverse playing a big role, despite the current HoloLens creator drama.

Ticker

Company

Price

MSFT

Microsoft Corporation

$254.60

HoloLens Will Keep on Rolling if Microsoft Wants it To

Alex Kipman may be the creator of the HoloLens, but his departure does not mean it grinds to a halt. This is a team that was estimated at 1,500 people earlier this year. The engineering talent is there to keep product development rolling. If Microsoft even wants to, that is.

The company previously cancelled the third generation HoloLens. The Army contract is reportedly in trouble. At this point, Microsoft may decide it’s better to leave AR headsets — and the cost of developing them — to third party vendors. 

Microsoft Has Bigger Metaverse Ambitions Than HoloLens

HoloLens was an early part of Microsoft’s metaverse ambitions. However, it was also a small piece in the grand scheme of things. The company has much larger plans in motion to capture those trillions of dollars in expected metaverse spending.

This includes its Azure cloud service — the metaverse lives on servers — Xbox gaming, and its acquisition of Activision Blizzard (NASDAQ:ATVI).

Bottom Line: Should You Buy MSFT Stock?

I would not be concerned about the Alex Kipman news at Microsoft and I’m not worried about its impact on HoloLens. If anything, the entire incident is more worrisome in the sense that Microsoft was supposed to have cleaned up its act — to the point that co-founder and ex-Chief Executive Officer Bill Gates was forced to step down from the company’s board after allegations of an affair with a staff member. Clearly, there is more work to be done there.

With or without HoloLens, Microsoft is on track to be a major metaverse player. In addition to that, never overlook those boring legacy products like Windows and Office that keep revenue rolling in year after year. In terms of whether to buy MSFT stock, this Portfolio Grader “B” rated stock is a worthy addition to your growth portfolio, especially at its current price.

On the date of publication, Louis Navellier had a long position in MSFT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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