Microsoft: Backdated Azure Growth And Pricing Discounts Make The Stock Less Attractive (Archive)

This 5-Minute Pitch was originally published on Seeking Alpha before the launch of the Hunting Alphas website. It is shared here to showcase my previous work and track record. New 5-Minute Pitches published on this site will not be disseminated anywhere else.

Elevator Pitch

• My bullish thesis on Microsoft hasn't played out well, with Azure growth and ARPU pricing tailwinds not meeting expectations.
• Azure faces supply constraints and likely market share loss, and MSFT's custom AI chip development lags behind competitors, which can impact longer-term supply chain efficiency and higher costs.
• Recent pricing discounts on Azure OpenAI API and Copilot may pressure gross margins.
• 1-yr fwd PE valuations are near peak levels, trading at a 64% discount vs longer-term averages. I think this is too high for comfort for buys on the stock.
• Relative technicals are resting at support and are likely to consolidate first before rising up. And the removal of a clause barring MSFT from using OpenAI's AGI-level technology for commercial purposes is a key upside risk to monitor.

Read the full article here.