Microsoft Corp (MSFT)

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.

Revenue is so consistent. Everything it does is recurring revenue. 18% revenue growth for one of the largest companies on the planet, best recurring revenue model ever built. On the leading edge of everything. Product suite is unbelievable. Stock buybacks. Might well be his favourite Mag 7. Yield is 0.63%.

Darling of the Mag 7.

EPS of $3.65 beat estimates of $3.37; revenue of $76.44B beat estimates of $73.89. EBITDA of $45.5B beat estimates by 15%. Microsoft's commercial remaining performance obligations of $368 billion in fiscal 4Q, more than $50 billion above 3Q, gives confidence in another year of mid-double-digit sales growth. Estimates for 13% gains next year will likely move up, led by Azure, which could expand 34-36% in 2026. Capital-spending consensus including leases is another metric that may see an upward revision, with analysis suggesting $118 billion for 2026, up 34%. AI workloads gaining scale and double-digit sales growth could help lift 2026 operating margin above 2025. In addition, tight cost control, particularly on head count, could offset any gross-margin pressure from a shift in sales mix to lower-margin cloud infrastructure and greater depreciation. We think AI is a big factor here, as the company, while spending lots of money, is getting good customer traction. But we think underlying customer growth is very much a part of the good results as well.
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Long term, definitely a good investment. Good company, has continued to grow, adapted through all markets. Trades ~41x PE, expensive. If you've owned for a while and done well, you may want to diversify away from it; but over the last 30 years, this has been a bad idea.

They just reported a blowout quarter with Azure cloud growth expanding from 35-39% in just one quarter. He's shocked. Is spending big on AI and it's paying off.

Likes dominance in its categories.

It reports Wednesday. Wait until the CEO speak before making a move either way.

Giant cashflow generator. Great dividend grower, though dividend's not big. Making new highs. Winner in cloud, lots of opportunity with Copilot. Great business platforms generate fees. He does have a significant underweight in tech, only about 7%. Expensive, but proved it can execute. Large-cap growth is one of the strongest areas of the market.

He trimmed a bit yesterday. 12-month price target of $514, so it's pretty close. He had a 7.5-8% weighting and brought it down. You can also write some short-dated (1 week, perhaps 2) calls. Doesn't see any catalyst until earnings come out.

Is doing incredibly well, being the software and cloud services and gaming plays. Also, it has embraced AI strongly such as savings in call centres while increasing customer satisfaction.

Historically trades at 25x PE, but is now 37x, not cheap.