Microsoft: Business Gets Better But Watch The Valuations (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

• Microsoft beat consensus estimates on both revenues and margins, albeit by a lower degree than the median average. But the guidance outlook has disappointed.
• Q4 FY23's earnings call set a bullish tone for Microsoft's relative strength as it continued gaining share in multiple product categories.
• From an absolute growth perspective, MSFT stock is facing headwinds in Azure, ad-spending, and gaming. It is not the same as the high growth times of 2020-2021.
• The stock is still trading at valuations near the 2020-2021 period. One can argue it is due to the promising AI opportunity. However, management indicated that material monetization is still a while away.
• Whilst I am a long-term Microsoft bull, I believe the valuations demand a neutral/hold stance as I anticipate the stock to perform in line with the market.

Read the full article here.