Buy, Hold , Profit.
We are not in the business of predicting when, or even if, a stock will rise. Our focus is on identifying businesses with enduring competitive advantages, run by capable management, and available at a sensible price. Microsoft, in our assessment, fits this profile.
Our analysis, centered on a conservative discounted cash flow model, suggests a fair value of $490 per share. This is not a target price, but rather an estimate of intrinsic value. We arrive at this figure by focusing on the company's future cash generating power, not fleeting market sentiment.
The market, in its typical short-sightedness, appears to be discounting several key assets. Consider:
- Quantum Computing: This is not a lottery ticket, but a long term optionality. It's a potential game changer, a wide moat for the future that is currently being ignored.
- Azure's Embedded Growth: We believe the cloud's long term potential is far from fully realized. Azure's sticky customer base and ever expanding services create a compounding machine.
- The Gaming Franchise: The acquisition of Activision Blizzard, alongside the existing Xbox and Game Pass ecosystem, establishes a dominant position in a growing market. This is not just entertainment, it's recurring revenue.
We are not concerned with quarterly earnings reports or the daily fluctuations of the stock market. We are interested in the long term prospects of the business. Microsoft, with its strong competitive position and significant growth potential, represents a compelling opportunity for patient investors."
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Disclaimer
The user davidlsander holds no position in NasdaqGS:MSFT. Simply Wall St has no position in any of the companies mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
