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Microsoft: Cloud Prospects, Q2 FY22 Guidance Looks Promising

Nov. 01, 2021 5:51 AM ETMicrosoft Corporation (MSFT)30 Comments


  • Microsoft demonstrates that size is no hindrance to performance.
  • Microsoft's next quarter guidance looks promising.
  • How shareholders should think about Microsoft Cloud's prospects.
  • Microsoft is priced at 36x forward earnings, seriously not expensive for what's at play here.
  • I do much more than just articles at Deep Value Returns: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Microsoft Square in Downtown Los Angeles

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Investment Thesis

Microsoft (NASDAQ:MSFT) continues to surpass all expectations, as its top line continues to grow at more than 20% CAGR, and its guidance for the next quarter also looks very promising.

Investors are asked to pay 36x forward earnings

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Michael Wiggins De Oliveira is an energy specialist whose primary focus is capitalizing on “the Great Energy Transition” - the confluence of decarbonization, digitalization with AI, and deglobalization - to achieve greater investment returns. Through his 9+ years analyzing countless companies, Michael has accumulated outstanding professional experience in the energy sector and a following of over 40K on Seeking Alpha.

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Comments (30)

slam stocks profile picture
MSFT is a massive conglomerate with multiple dominant businesses. They’re involved in so many activities, the cross selling likely significantly understates their Cloud growth to boost returns in other divisions. It’s highly likely to downplay their market share and quietly continue their substantial growth claiming being Second. Cloud is just beginning to accelerate and often compared to the Railroads. MSFT will be the Central Station HUB. A very strong buy and continuing to add on dips.
Great article! Great quarter and great ability to grow top and bottomline. It’s still very fairly valued as I think it will rally
If an investor is worried about MSFT's PE ratio; there's always INTC, XOM, BP, and a variety of "core" stocks selling at PE's lower than their shoe size. If PE is your main parameter, good luck in the above shares or many Utilities.

Who needs a Ferrari anyway?
No Guilt profile picture


That’s ONE basic way to look at things
Shangrila Value profile picture
Good thesis, but I wouldn't call 36x as "seriously not expensive".
wsoyke profile picture
@Shangrila Value
Considering growth, recurring revenue, M&A, R&D, margins, cloud growth, gaming, shareholder return, the PE doesn't tell the whole story.
Too often "value" investors fail to see the "value" in growing companies. Second level analysis is required here. Where is the puck going? MSFT is firing on all cylinders in every segment, and will continue to do so, probably for decades at least.
No Guilt profile picture
@Shangrila Value

PE is one side of the equation

So go buy a “cheap” no growth stock.
@No Guilt MSFT is my biggest position, but you guys make it sound like this is super easy to invest in considering the 2.5T market cap. The company is a clear winner and as long as Nadella leads it’ll probably keep growing. I can’t call a 2.5T business cheap even with their incredible growth and numbers.
Long time MSFT stockholder, best investment I ever made.
Nadella has been the perfect leader for this terrific company.
ChuckXX profile picture
I also own MSFT but with $4.9 Trillion Dollars sitting in Money Markets & interest rates still incredibly low there is no place to go with all this money. Now if a person could get 5% in a 10 Year Treasury then all bets are off. That won’t be the case anytime soon.
Willow Street Investments profile picture
@ChuckXX "there is no place to go with all this money"

Yes there is, value stocks.
Dividend Ambassador profile picture
@Willow Street Investments Boy, that is where I have been going. During the Pandemic I have put lots of new money into the likes of PRU, CVS, PFE, PM, MRK (all at significantly lower prices than today — not buying at today’s prices) and BMY, BTI, MO, AMGN, ABBV, C, CI, GILD, UNM (at slightly below or slightly above today’s prices — still buying). I also managed to scoop up some AMP and some SNA and PRU (got some around 40 and kept buying into the 70’s) at just MASSIVE discounts during the actual days of the initial Pandemic Panic.

This has actually been a good period for value purchases.
Willow Street Investments profile picture
@killiondt Bought CVS last year, AOS in 2020, INGR early 2021, VFC several weeks ago and looking for some more GILD if it stays down.
Willow Street Investments profile picture
I own msft for 25 years and a 36 pe is very expensive...one small stumble and look out below.
Dividend Ambassador profile picture
@Willow Street Investments I agree. Even 20% growth which is very likely unsustainable for more than a couple to a few years does not justify PE 38. Sorry. I will hold unless things get as insane as they did in 2000 (PE 70).
Willow Street Investments profile picture
@killiondt I am in it for the income...getting $2000 every 3 months from MSFT.
Dividend Ambassador profile picture
@Willow Street Investments Yes, $8000 per year is wonderful. Only $500 every 3 months or $2000 per year from MSFT here.
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