Microsoft: Approaching Future-Defining Cash Flow Inflection Point

YR Research
4.54K Followers

Summary

  • Microsoft is a clear leader in AI monetization, with favorable OpenAI deal terms and accelerating revenue from AI products.
  • Operational execution remains stellar, with broad-based double-digit growth, expanding margins, and a record backlog across Azure, 365, and enterprise suites.
  • Capital intensity is nearing an inflection point, positioning Microsoft for significant free cash flow expansion as AI investments start to mature.
  • Despite recent stock gains, Microsoft trades below historical valuations, making it a 'Strong Buy' with a $585 price target and robust growth outlook.

Microsoft software company

tupungato

Roughly two and a half years passed since November 30th, 2022, the day ChatGPT was launched.

Somewhat surprisingly, it took about this long for Microsoft (NASDAQ:MSFT) to enter outperformance territory.

Just a few months ago, Microsoft shares were still

This article was written by

4.54K Followers
I aim to invest in companies with perfect qualitative attributes, buy them at an attractive price based on fundamentals, and hold them forever. I hope to publish articles covering such companies approximately 3 times per week, with extensive quarterly follow-ups and constant updates.I manage a concentrated portfolio targeted at avoiding losers and maximizing exposure to big winners. This means that often I'll rate great companies at a 'Hold' because their growth opportunity is below my threshold, or their downside risk is too high.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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