Opinions
The Monthly Gems by Allan Tong
Microsoft Corp
MSFT-Q
TOP PICK
Nov 01, 2024
Stock price when the opinion was issued
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People are taking profits in the Mag 7. Still a top pick. AI-cloud dominance and smart investments are driving their growth. Financial strength keeps them steady in uncertain markets. Her price target is $480, another 25% upside. You could add to your position now.
Shares are back to July 2024. Will this be closer to $300 or $500? The easy answer is $500. $300 would mean a lot of fundamental concerns on the macro side of the market. Look for guidance ahead. Are they still on schedule to spend $13 billion this year? And what will they get in return for that? Their last Q4 revealed that their AI business surprisingly surpassed their revenue run rate of $13 billion, which was a lot sooner. Companies like this are spending alot, but they are making money back in AI.
MSFT recently reported a 170% increase in its AI and cloud services segment. It is a key player in the space and a solid company to own. It has been prudently using some of its cash reserves to buy back shares and retire debt. It supports a ROE of 34%. We recommend setting a stop-loss at $340, looking to achieve $505 — upside potential of 29%. Yield 0.8%
(Analysts’ price target is $504.89)We expand economic opportunity and growth for all. Economic growth and opportunity must reach every person, organization, community, and country. This starts with ensuring everyone has the skills to thrive in a digital, AI-enabled economy, and extends to empowering nonprofits, entrepreneurs, and other organizations to digitally transform and address society’s biggest challenges. Social media mentions are up 467% in the past 24h.
Has a durable business with Office software essential in the workplace. Their large cloud business adds to overall growth. Is -24% from highs, the best among the Mag 7 during this tariff war. However, its CoPilot isn't successful and they are breaking up with Open AI. At 27x PE, you can buy some shares now.
Fundamental resilience is near the top of the Mag 7 pack. Sticky, mission-critical services. Fell on generalized market weakness. Continues to grow at compelling mid-high teens pace. Flexing pricing power with subscription renewals. Cloud business still growing, but at a decelerated pace. Own for the long haul.
Its PE sank to 34.4x after that report, close to its median average of 33.94x. Its quarter was far from a disaster, so the sell-off was an over-reaction. Year-over-year earnings actually rose 10% and sales 16%, while Azure revenues jumped 32%. MSFT pays a 0.77% dividend, so you're not buying this for income. This is one to hold long term.