Microsoft: Buy In Time For AI Payoff

Summary:

  • We remain buy-rated on Microsoft, anticipating an AI payoff in 2025.
  • Our belief is that Microsoft’s next leg of material outperformance will come from its heavy AI-related investments turning into AI monetization.
  • We think the company is uniquely positioned to stand on that leg next year due to its positioning with Copilot sticky integration and better Azure growth as macro headwinds ease.
  • We expect Microsoft to be an outperformer for 2025.
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We’re maintaining our buy rating on Microsoft (NASDAQ:MSFT), but updating our investment thesis. The stock fell after reporting its Q4 results, showcasing a top and bottom beat but weaker Azure growth. For the quarter, the company reported a 15% Y/Y increase


Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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