Microsoft Corp (MSFT)

Overpriced in 1999-2000. Didn't regain the high it reached in 2000 until 2014 or 2015. That was 14-15 years of dead money. It's gone on since then, reinventing itself with the cloud business. 

Pulled back since it last reported a few weeks ago. Below $500 is a very attractive entry point, trading at 30x forward PE. Not cheap, but reasonable given growth rate and outlook. Reported that topline grew 23%, while Azure grew 40%. Embedding AI in its offerings. 

Down, but not that much. Expensive stock, so this name would be front-and-centre in a correction. Still, Azure growth was 40% last quarter. Continues to deliver. You can see why they're winning all this cloud business (his office switched to MSFT servers, and now all of a sudden every problem is MSFT's, not John's anymore).

Competitive market. Unknown what ORCL will do as the fourth player. Bigger question for the hyperscalers is how to monetize AI. Owns other names that are cheaper.

A leader in AI. Over $100 runway to analysts' average price target. Stick with it, so many horses in the race from data to cybersecurity to AI applications. Main horse is Azure for cloud computing.

Of the group, MSFT is the most interesting to him. While it's expensive at 34x forward PE, it's not terribly so. Over its history, it prices in a lot of good news the way it did toward the end of 2021. Then something negative will come up (not necessarily company-specific), and the stock corrects pretty significantly because of its valuation.

Stock ran up from the panic selloff in April, going from $350 to $550. Post-earnings, if it can't get to and hold $550, then it tells him we'll be in a sideways pattern that could last a year or so.

The question was on buying before the earnings report on Wednesday. He doesn't speculate. Time is on your side so buy good assets when they are priced right.

Steady 10-15% earnings growth, and a lot flows through to FCF. Can easily fund a lot of the AI buildout. Can't actually build fast enough to get the GPUs they need to grow the business, so this might be an issue. Azure still growing almost 40% YOY. Multiple not demanding, perhaps even undervalued. He'd buy on any weakness over next couple of years.

If offers the most diversified distribution of software technology around the world. Not really an AI company, but a distribution platform for the Fortune 5000. Not a compelling bargain today, more of a hold. You have to look long term for 5-10 years -- it will have a role to play, no matter which way the technology goes.

A leader on many fronts. Return on data-centre capex is impressive. Not trading at an excessive multiple. Trades at a premium, but also growing at a premium.

No concerns at all. Hold on. Perfect candidate to write some shorter-dated calls at 4-5% higher, but also sell some puts. This strategy will make you some income on both sides. If you get hit on the put, it's probably a pretty good buy.

The company he'd be owning 5 years from now. Partnership with OpenAI is most consequential company of our time. Totally ahead on AI. Absolute beast when it comes to distribution. Wide-reaching tentacles across every Fortune 500 company. Path of least resistance when it comes to adopting AI -- security platform, Office 365, Copilot powered by ChapGPT. Yield is 0.66%.

Are beating the other AI cloud companies, including Amazon. Their adoption of Co-pilot is ramping up. Well-managed. It remains good value at 34x PE. Is growing rapidly and consistently. We're in the early innings of AI.

12-month price target of $620. Hasn't trimmed, still second-largest holding in his fund. Earnings were very strong, especially coming out of the cloud. So many strong horses in the race. Very strong in AI participation.

Buy in thirds here, under $500, and ~$470.