Microsoft Corp (MSFT)

It's incredible that the largest companies--megatech--keep going straight up. But it's inevitable to take profits, like she recently did with Apple. Still a fine company. She added to Microsoft because she sees a little more runway ahead. Markets will more further, because the money sitting on the sidelines is entering the market. But eventually, the market will scrutinize valuations.

Loves the company. Wouldn't add right now. Recently trimmed on valuation, north of 30x earnings, and free cashflow yield is lower than in the past. Will do exceptionally well over the long term. Risk of multiple contraction. If there are no tax implications, consider trimming just a bit to take some off the table.

The price target was raised today. It's enjoying the AI tailwind. Tech in general will get bigger and bigger.

Happy to own Apple and Microsoft, but they've risen too far too fast and gotten ahead of their skiis, so he has taken some profits, but held onto the rest of the shares, because they can grow into their multiples.

Wait for shares to fall before buying.
Excellent company but shares expensive.
Very good A.I. exposure.
Unsure on direction of business.
Better names out there. 

A top 5 holding for him. Led the charge in generative AI. He trimmed when it approached his price target of $338. Good entry points are $325, 315, and 300. Doubts an entry below $300, as it has so many horses in the race. He has a 3.5% weighting. If you don't want to trim, you could write calls against it with strikes around $335-345.

Very strong company that will continue to hold.
High margin business on the forefront of A.I. research.
Current price is a good time to trim position.
Very strong management that is investing in new technology. 

Very strong company with excellent prospects. 
Strong intellectual property.
A.I. investment top notch.
High margins & return on equity.
Good management team.
Cloud based computing business growing strong. 
Under 20x earnings a good share price to buy at.

He missed some tech stocks like MSFT and Meta--both can keep going with efficiencies, good balance sheets, cash flow and safety.

It deserves its re-rating. The report was a relief and its numbers beat: slightly better revenue and costs, making some disciplined margin improvement, and generated a lot of free cash flow. Generative AI is important, though they didn't stress it in the call. MSFT's beat benefits the market as a whole, given its 6% weight in the S&P. MSFT is on the verge of acceleration. Bulls say it's the way to play AI safely (cushioned by its various businesses), but bears say the valuation is too high and it isn't a pure-play AI. Her answer: the chart has climbed a wall of worry and has made a beautiful move higher after bottoming at the end of 2022. Also, the UK blocks Microsoft's takeover and she's glad--videogames are cyclical and is a tough business.

Strong momentum in generative AI. There's faith in Azure cloud re-accelerating. At the end of 2022, MSFT didn't suffer from weakening fundamentals, but rather was a victim of tax-loss selling for the megacaps. The report reiterated a strong fundamental company that's focused on the cloud. Shares remain 15% below its 15% all-time high from Nov. 2021, and entering 2023 saw under-allocations not seen for 12 years. Since then, investors have been rebuilding their positions as growth returns in vogue and yields fall off.

The problem with MSFT is that it trades at 27x 2024 earnings. Therefore, they need earnings growth in Azure and every business to support such a big multiple. She was wrong; she missed it.

This is the best day for MSFT stock since last Nov. 11 when it came off the bottom. The difference with today is that MSFT was already climbing going into yesterday's report. Now, the stakes are so high that it will be hard for MSFT to keep surprising to the upside. It's trading on a 20x on EV to EBITDA, within the three-year median, but above the 5-10-year average. Can MSFT keep delivering upside beats? Don't enter this stock today, but wait for a lower price. Kudos to long-term shareholders of which he is not one. Today is a spectacular move for a megacap. That said, we're going to have an AI bubble later this year. Money managers consider MSFT the safe way to play AI.