The Panic-Proof Portfolio (Stockchase Research)Microsoft CorpMSFTTOP PICKJan 08, 2026

It flatlined for much of the year and he PE has come in quite a bit. It's one the highest-quality, broad-based tech companies. Delivered a strong last quarter. It's delivering.

He's at maximum weight today. Both divisions, software + Azure, are successful and growing fast. Software just has to be "good enough", and Fortune 500 companies climb aboard. Doing a decent job to win the future AI game. No problem starting a new position today.

Loved it around $420 but is expensive now. No, thanks. He bought many shares around $400, then exited.

Before earnings, the stock was flat because they were perceived as behind the curve in AI, even though they own half of OpenAI, and Co-Pilot has been a bust. But a Chinese open-source is coming soon to compliment Co-Pilot, which raise the profile of MSFT's AI.

Thinks this name, as well as a lot of the big tech names (perhaps with the exception of GOOG), will go sideways for the next several years. Highs of $500-550 are what we'll get. He loved it in the last 6 months. Now he's out. Thinks you'll get a chance to buy again at $400 or below.

Likes it at 20-25x PE, but not at 30-35x. It's that simple. Too expensive for what it's likely to deliver.

(Note the short timeframe.)  Market's been hating these companies due to uncertainty about capital spending. Revenues are accelerating, yet market's ignoring that. Continues to buy more. FCF should become much higher in late 2028. Topline is growing faster than expenditures, and will overtake them at some point.

Short term you can take profits after that parabolic move. Their quarter was excellent. He believes in it more than before. Excellent CEO.

After February, shares fell from $500 to $350, which became a buying opportunity. But now, it's recovered and is a hold and a great time to write options.

He took profits a while ago. The issue was that it got a bit expensive compared to some other names. Now at 25x forward PE for 15% growth. Improved technically quite a bit with recent jump in share price. Now above 200-day MA, but overbought. 200-day MA still falling. Just watch for now.

Since reporting last week, they've rallied almost 130 points. MSFT is at the epicenter of the software (SAAS) socks and ultimately is where you'll make money as these models as these models commoditize. MSFT said, this capex spending is here to stay, but software isn't going away. She didn't sell it before earnings (it had been lagging all year), because she firmly believed in the CEO who did a great job of reading the room, of not doing what Google's doing. They said they will have free cash flow and won't go to the debt market (MSFT and JNJ are the only triple-A companies). Cloud revenue beat and guided upward. Still gotta see what they're spending on capex, but they're monetizing cloud. People are looking at this in a new light as it is re-rated.

He had covered calls until their report last week blew it out of the water, exceeding anything he could dream of. So, he wrote a $530 call which expires in a couple weeks. He's harvesting some volatility without any loss of conviction in the name.

Was the most impressive stock this quarter. He was pounding the table on it before the quarter. It's not a software stock, but a utility. Everyone uses their products every day. MSFT has Co-Pilot, LinkedIn, Word, Teams and more. Operating margins are huge, still robust. Balance sheet is solid. Their RPO is north of 650 billion. Great managers. But the stock has run up a lot so mind the gap with the valuation.

They just reported a blow-out quarter. Despite massive AI spending, MSFT is cash-flow positive and are integrating their AI into their software. ALso, their cloud business is on fire. It continues to rise in a straight line.

Was up 24.6% last month, mostly after its blow-out quarter last week. Great numbers on Co-Pilot use and MSFT has controlled spending. He owns a large position.