Microsoft: Market Optimism Starting To Outrun Valuation Reality

Gravenhurst Capital
449 Followers
(12min)

Summary

  • Microsoft's AI-driven growth, especially in Intelligent Cloud, underpins its strong business fundamentals and growth trajectory, but rapid Capex growth and high stock price are the key risks.
  • Our DCF model values Microsoft at $365 per share (base case), well below the current $470 price, indicating limited upside for new investors.
  • A higher valuation may be warranted if Capex slows and growth holds, or rates decline (lowering WACC), but our view remains grounded in fundamentals.

Microsoft"s headquarters in Bucharest, Romania

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Microsoft Corporation (MSFT), the tech giant that transformed the personal computer space in the 80s, is now a driving force in the ongoing AI transformation that touches all industries. Back then, the company banked on Bill Gates' experience, entrepreneurship, and first-mover advantage

This article was written by

449 Followers
We write about companies trading at attractive valuations with strong durable competitive advantages. Investment Principles- Invest in companies with consistent earning power and durable competitive advantages.- Invest in companies where we can get a sufficient margin of safety.- We prefer companies that generate substantial cash-flow and consistently earn above-average return on capital.- We prefer companies with conservative leverage. - Always hold an appropriate level of cash in order to be able to capitalize on market volatility.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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