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The Beast of Redmond feels undeniably less fearsome than in days of yore and CEO Nadella faces the unpleasant task of grappling with the slow decline of the company’s once impregnable bulwarks as he tackles the challenge of shifting from a world centered around the PC and purchased software to a universe of mobile devices and streamed (or even free) software. But Nadella is rising to the task. Microsoft’s Surface tablet/PC passed $1 billion in annual sales, can be seen on the sidelines in NFL games, and feels like a bona fide offering (as opposed to an embarrassing me-too like the Zune). A two-decade company veteran who took the CEO helm in 2014, Nadella is betting big on Project HoloLens, an augmented headset that layers the virtual and digital worlds on top of what your eyes see of the real world (as opposed to locking you entirely inside the VR headsets, as rivals do). Microsoft doesn’t produce the outlandish profits of the past—though $12 billion for 2014 is nothing to sneeze at—but investors are showing signs they think Nadella can lead the company to success in the new world: Its long moribund shares are up 45% since Nadella became CEO—more than doubling the S&P 500 and the Nasdaq.