Opinions
Brad Gerstner, founder & CEO, Altimeter Capital
Microsoft Corp
MSFT-Q
BUY ON WEAKNESS
May 05, 2025
Stock price when the opinion was issued
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Premium contentPremium contentLikes the stickiness to both personal and corporate clients -- once you get into the network, it's very hard to get out. Cloud business has improved significantly. If quantum computing ever comes to the forefront, MSFT is there.
ROIC is 23% vs. WACC of 9%. This gives them lots of cashflow to pour money into the next greatest thing. R&D development is important, given how fast things are changing these days. Yield is 0.72%.
Excellent company that meets his criteria. If you made him choose one or the other today, he'd have to say META based on valuation (with the assumption that the investor would hold a position for the long run). MSFT trading ~37-38x PE, whereas META is in the mid-high 20s.
One of his top-performing stocks. He targets $514. Very well-run company. Boasts solid moats in enterprise software and operating systems, which ensures recurring revenue and customer retention. Azure Cloud remains second only to AWS. The valuation may be elevated, but MSFT is good now for selling some calls given volatility. Keep the calls pretty sure, writing calls around $490-495.
He has been buying tech during this dip, in April particularly. We will eventually exit this volatility and find stability and confidence in the market again. Meta and Microsoft are some of his key holdings, and they affirmed their capex guidance--they are spending to make incredible investments over the next three years, because they know AI is the biggest super-cycle every in technology. There is incredible pent-up demand for AI from businesses and consumers. The CEO of MSFT reported that his company processed 50 trillion tokens last month alone, or 3.5 million years of AI conversation.