๐ ๐๐๐๐: ๐๐๐ "๐พ๐๐ฅ๐๐ญ ๐๐-๐ฅ๐ง๐๐๐๐ฃ๐" ๐ฟ๐๐ฅ โ ๐พ๐ง๐๐จ๐๐จ ๐ค๐ง ๐๐๐ฃ๐๐ง๐๐ฉ๐๐ค๐ฃ-๐ฟ๐๐๐๐ฃ๐๐ฃ๐ ๐ฝ๐ช๐ฎ?
We just witnessed one of the roughest months for Microsoft ($MSFT (Microsoft)) in years, with the stock more than 20% down into a textbook bear market.
If you look at the market pricing, sentiment has completely flipped from absolute AI hype to panic. But as value-focused or long-term investors, this is exactly the kind of volatility we look for.
Letโs separate the short-term market noise from the long-term underlying fundamentals. ๐
๐งฑ ๐๐๐ฎ ๐๐จ ๐ฉ๐๐ ๐๐๐ง๐ ๐๐ฉ ๐๐๐ฃ๐๐-๐๐๐ก๐ก๐๐ฃ๐?
The entire selloff boils down to the $190 Billion projected Capital Expenditure (Capex) to build out massive AI infrastructure and data centers.
The pricing of MSFT has changed from a high-margin, asset-light software compounder to a capital-heavy utility or industrial infrastructure company. Investors are panicking about a near-term squeeze on free cash flow.
๐ ๐๐๐ ๐๐๐๐ก๐๐ฉ๐ฎ ๐พ๐๐๐๐ : ๐๐ค๐ค๐ ๐๐ฉ ๐ฉ๐๐ ๐ฟ๐๐ข๐๐ฃ๐
Infrastructure spending is only a risk if you are building "on hope." But Microsoft isn't guessing โ they are fulfilling actual, massive, pre-funded demand:
โข Azure Growth: Cloud revenue is still growing at 40% year-over-year.
โข Commercial Backlog: Microsoft's contracted backlog sits at a mind-boggling $627 Billion. That means more than two full years of total corporate revenue is already locked into contracts.
โข AI Run Rate: Their enterprise AI business alone has already crossed a $37 Billion annualized run rate.
โข Electricity: A 20-year 2.67-gigawatt power agreement was concluded with Chevron to col-locate natural gas power directly with AI data centers.
The money being spent on data centers today is directly building the pipelines for revenue that is already contracted for tomorrow.
๐ท๏ธ ๐๐๐ก๐ช๐๐ฉ๐๐ค๐ฃ
PE: Because of this dip, MSFT is trading at roughly 20x to 21x forward earnings.We have not seen Microsoft this cheap relative to its structural growth potential since late 2016. The valuation multiple is nearly 35% below its recent 3-year historical average.
DCF: In the table the potential upside per the DCF is 28% with a safety margin.
Dividend: MSFT has a dividend yield of 0.9%.
For patient, long-term copy-traders and allocators, this structural re-pricing is creating a highly attractive risk/reward window to build or compound a position.
๐ข ๐๐๐๐ฉ ๐๐จ ๐ฎ๐ค๐ช๐ง ๐ข๐ค๐ซ๐ ๐๐๐ง๐?
Are you ๐ด Selling the risk, ๐ก Holding through the cycle, or ๐ข Aggressively buying the dip?
Drop your thoughts below!
$MSFT $SP500 $GOOG (Alphabet)... Show More
Not investment advice. The author may have financial interests in the mentioned instruments.
Yo estoy comprando de a pocos considera ndo un margen de seguridad del 30%. Esta accion esta dentro de mi prรณxima compras mirando a largo plazo. ... Show More Translate
17% is your bull case, I am guessing that's for revenue? I would expect EPS growth to be in the mid-20% range. Overall, the growth assumptions seem to accelerate across the board. Of course, the main concern is capex, but the returns appear to be in their favor.... Show More
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