MSFT — 20 entries on this page, 2 of them a change of direction.
What about Microsoft? Microsoft is at a sell signal. You can see how greedy the stock has become and how it has jumped upwards. It was moving sideways slightly upwards here. Four more out of nine are for Microsoft. That's four out of nine for you.
This may not mean much to Meta and Microsoft given their strong technology there, and even Amazon, but smaller competitors may be able to take advantage of it.
Now we move on to Microsoft. The stock started at $510. The stock fell 2% this week to $499. This comes as Stifel raised its target price for the stock based on improvements to Copilot and artificial intelligence.
This is what I generally see happening with Microsoft.
Microsoft is in a bullish breakout phase. The price has broken through here with high trading volume. You can see upward gaps here and it has been in the buy zone for a while, so I'm not going to chase the stock now, but they are holding steady at the $500 level.
If we can maintain this level, I think we are looking forward to much higher prices.
Apple and Microsoft have taken radically different approaches to the artificial intelligence boom . Microsoft has invested hundreds of billions of dollars in building data centers and investing in strategically important companies such as OpenAI.
So, given these two very different approaches to the AI boom, which of these two companies is the better stock to buy right now? Over the past decade, Apple and Microsoft have done an excellent job of increasing revenue.
To say how much you hate Microsoft. Suddenly we were We talk about it, and we talk About it, then it comes The elections are going ahead, and... Someone is back talking about it.
Is there a difference? Among companies like Oracle And Microsoft? certainly. Microsoft "and Johnson & Johnson" They are the only two names The two remaining in the market Rated AAA.
Uh Microsoft upright at the open. That's interesting, too, because I wonder how software versus hardware is going to do here today.
Microsoft has launched a major new initiative embedding 6,000 engineers directly with customers to deliver measurable business outcomes. Additionally, the management team highlighted that its Azour AI business added $50 billion in backlog in just over 3 months.
But does all of this make Microsoft stock a buying opportunity? Throughout this disruptive AI technological boom, Microsoft has delivered continued revenue growth. In the most recently completed quarter, its revenue growth approached 20%.
Over the many years, its revenue has grown from roughly $75 billion in 2017 to over 332 billion in the most recent trailing 12-month period.
we generally see Amazon Web Services, Microsoft Azure and Google Cloud controlling a similar mix of AI lab compute spend in the next 2 years before this shift to backs stopped infrastructure kicks in.
Aka Amazon, Microsoft and Google have pricing power now for their labs, but after that that pricing power moat might go away.
So, we'll start with the name that probably we're all familiar with, Microsoft. And I think the chart of Microsoft is an important one to watch, not just for the individual stock, even though I would say out of the sort of magnificent seven or what my viewers have asked me to uh to start calling Dave's dirty dozen, I think that was a great uh great idea of uh of 12 key uh stocks and ETFs to track in the growth space.
First up here is Microsoft. Here's that gap up on earnings. The stock pulled back rather orderly, but more recently it has been on the move higher. So, we have a nice base breakout coming out of a 2-month base.
The company is very involved in cybersecurity software. Their Azure product does produce 20 billion in security-related revenues for the company. So, this is a participation rally in the move earnings-related move into software stocks.
And again, we did see this nice base breakout today. Very decent volume. We have a positive RSI. Now, if we can get that black line up through the red on the MACD, that would give more conviction to the current uptrend taking place in Microsoft.
Uh next up, we've got MSFT. Look at Microsoft pushing up nicely today amongst the sea of red that we already did cover here on the charts. Great gains here for a mega cap.
That also should be news to you, folks, that when we are under some severe selling pressure, yes, the mega caps can get hit, but they are also a likely first place of safety for investors to go to since they do have very deep pockets, and they do also generate fantastic revenue, and they've got a lot of participation with market investors wanting to ensure these prices maintain.
How much does Microsoft? They're spending billions of dollars on capex. How much does this make?
I think Microsoft's OPEX is like 150 billion Microsoft, Google, Amazon, Meta, cranked up prices, changed ad auction stuff.
Analyst expectations uh from like UBS, Barkclays and uh Wells Fargo have $440 billion of cloud revenue across Google, Amazon and Microsoft coming just from open air and anthropic to unprofitable startups who need to constantly raise money
We have Microsoft there. Stock up 38%. If we look at the value, 487 stock price. If we look at the value intrinsic value if they keep on growing at 15% to 10% then yes there is value if they grow faster even more if they slow down then it looks much much risky and given that we discussed Microsoft how all the growth comes from entropic and open AI so fake revenues I'm putting at a high risk reward now from that perspective
Most of you probably don't know that Microsoft just kind of secretly or tried to be a little secret about it, kind of sweeping under the rug, changed their accounting techniques.
It says the accounting change adjusted the software giant's CapEx expectations to about 175 billion down from 190.
This article from the Wall Street Journal details how Microsoft is making it difficult for investors to understand what they're actually doing, what their CapEx costs are, what their financing costs are.
This one is from The Wall Street Journal. They say that Microsoft is leaving investors flying blind on its AI business across three critical drivers of the AI future, cloud computing, capital expenditures, and its relationship with OpenAI.
The company disclosures fall well short of what investors need.
What's interesting is we can see Microsoft came in at number one. Now, Microsoft over the last five years has grown earnings at a high rate with a EPS CAGR of above 18%. And what you'll notice is they're trading quite a bit below their four-year average PE multiple.
So, if we look at Microsoft here on Forecaster, there's a couple of different things worth pointing out. If we look at sales over the last five years, we can see it's grown substantially.
And along with it, the share price has climbed higher. But what you will notice is if you look in the last year, they're down by 3%, but the share price has been incredibly choppy, particularly from around April to really around current day.
The stock went from trading as high as $541 a share all the way down to 356, climbed back up to 460, and then quickly fell all the way back down to 352. And then after the recent earnings report, peaked at about $506 a share. That is a lot of volatility.
We talked about Microsoft growing earnings double digits in the 2000's decade and the stock price being flat because it was because it went into that period at like 70 times earnings.
Now, after that, we have Microsoft. Microsoft is number eight. It's a $104,000 position. $50,000 of that being gains, and it's a 7% weighted position. For Microsoft to get that $10,000, I will need it to drop down to $400 per share from the $490 that it currently trades at.
After the last earnings report, Microsoft shot up around 25%. It went up like crazy. And before that, it was at $400 per share. So, if Microsoft simply gives up the gains of its last earnings report bump, then this will be the one that gets that $10,000.
We can assume a modest 12.4% EPS growth rate over the next 5 years. With that, I believe that Microsoft's appropriate EPS multiple quite high given the moat and the structure of the company, I think it should trade at a 28.
And with those assumptions, buying it at $400 per share gives us a compounded annual growth rate of 16.8% over the next 5 years, which I believe would soundly outperform the market.
I like Amazon long a lot. Jeff Bezos has been on the offer that's been driving this thing down, but I like this Amazon and Microsoft were the best two earnings reports out of the mag seven stocks.
So, I do think that these are stocks that you can still own at this point.
Path one is you own Microsoft, let's say. You sell a call, you collect premium, assignment happens and you're out. Stock runs another 20% and you collected your premium. You're up 18% total. Not bad. You move on to the next stock.
