Microsoft

Microsoft benefits from a wide and durable moat with multiple sources of competitive advantage. Its Windows operating system and Office productivity suite have entrenched positions globally, creating substantial switching costs for businesses and consumers – it's costly and disruptive for users to abandon these ubiquitous platforms.

In addition, Microsoft enjoys significant network effects: the value of its products increases as more developers build Windows/Office-compatible software and as more professionals join LinkedIn or use GitHub, both owned by Microsoft.

The company’s massive scale also provides a cost advantage, especially in cloud computing (Azure) where only a few players can afford comparable infrastructure. Morningstar notes Microsoft’s moat stems from “switching costs, with network effects and cost advantages as secondary” factors.

These advantages are not static – Microsoft continues to widen its moat by expanding its product ecosystem (e.g. integrating AI features across Office, Azure, and GitHub).

With dominant market share in several software categories and Azure rapidly closing the gap with AWS, Microsoft’s competitive position appears secure for the next decade and beyond.

The company consistently earns high returns on capital, a sign of a strong moat – analysts expect it to maintain returns well above its cost of capital over the next 20 years.