Microsoft Corp (MSFT)

A must-own name. Not discretionary; its productivity suite is mission-critical for home and business. Cloud computing is doing well and taking market share in a growing category. Hardware, gaming, etc. Prolific cashflow. Will be a first mover and leader in AI. Off its highs, good opportunity to add. Over time, just keeps going higher.

Owns shares in company, and has owned for years. Very good business with low debt, high quality revenues, low capital requirements, sticky products, good tech stack. Overall a great business that would recommend investing in. High amounts of free cash flow with ability to compound earnings (low dividend payout too). Only knock would be that the valuation is very high - would recommend investing at a lower price. 

He hasn't owned this in decades. He bought it in the recent tech dip. Trades near 30x PE, attractive historically. Are heavily into AI. Grows at 15-17% annually in profits and cash flow.

On March 16, 2020, MSFT lost $178 billion in market cap and has since rallied 202%, beating the S&P's 131%.

At beginning of August reported revenues were just shy, lowered guidance, so stock pulled back. 12-month price target of $490. He's adding now, and wants to get it back to a 7-8% position. Yield is 0.7%.

Rule of 40: If revenue growth rate plus profit margin = or exceeds 40%, then it's a good buying opportunity. For MSFT right now, FCF margin is ~30%, revenue growth is just shy of 16%, and that comes to 45-46%.

Still bullish, even with Mag 7 pulling back. Pullbacks are healthy, great buying opportunity. Still a 10/10 on fundamentals. Long-term upside. Cloud is growing rapidly, especially with AI demand. PC operating system has multiple, positive catalysts. Poised to benefit from acquisitions in AI and cybersecurity.

She'd still buy at these levels.

On the S&P, the best earners remain the Mag 7 like this. A lot of the dollars invested in tech ETFs goes into the Mag 7 names. This will continue to thrive for the rest of the year.

Spending is really strong for their wares; it's been a capacity issue.

They haven't caught every tech trend, falling behind internet search, but they are ahead in AI and likely the biggest investor in AI. If any company comes through unscathed, it's MSFT. It's stood the test of time. He'd add on a pullback.

He was always told never to make a time or price prediction. Growth stock, Azure has been great. In the right places. Trades at a multiple that far exceeds its growth potential. 

Don't look for earnings in 2025-2025. Look out to 2026, and you don't see the big double-digit gains that the market's paying for. It's a bit scary, but especially if you're looking to cash out and make money 2 years from  now.

Best distribution platform in the world for technology, leader in AI and in cloud. Leader in every part of software and a fully integrated technology stack that you want to be in. Own it in size and with a long-term horizon, and it will be a winner. He'd average into it.

Still in his top 5. He has about a 7% position, so he wouldn't be adding more today on the pullback. 12-month price target of $491. Strong financial performance, great innovation including AI, brand recognition. 

Reports next Tuesday. They're great, because if they miss, they telegraph it. They're not going to miss.

A secular grower that grows its dividend reliably.

Along with AMZN, AAPL and GOOG, one of the greatest businesses the world has ever seen. Generates so much cashflow, growing at impressive rates, even as it gets bigger. Law of large numbers just doesn't apply. Tailwinds from so many different areas.

Wildcard is AI, and a lot of stocks have moved up on the hype. Should benefit from AI. Not cheap valuation, but not egregiously expensive. He doesn't know how far any pullback would be, so perhaps start nibbling here.

Down today because the NASDAQ's down quite a bit. Likes it for the cloud and AI exposure. Shares have done well, and look good technically. 200-day MA is moving higher, as is the stock price. Lofty valuation at 35-36x forward earnings, 12.5x price to sales.

Holding it and being careful. When the tide turns on technology, he'll probably trim.