Microsoft: Pace Of AI Monetization Is Faster Than Expected


  • Microsoft is increasing its spending on AI capabilities and has experienced a strong rebound in top-line growth due to its early success in AI monetization.
  • The company’s AI product, Copilot, has attracted 1.3 million customers and is driving growth across the broader GitHub platform.
  • The management mentioned a continued increase in capex on AI infrastructure in FY2025 while managing to maintain margins.
  • The stock is currently trading at a premium valuation, reflecting its strong growth rebound in cloud and other AI initiatives compared to its software peers.
  • MSFT is highly correlated with broader indexes, which diminishes diversification benefits and exposes investors to higher systematic risk.

Glass brain with connectors

Jonathan Kitchen

Investment Thesis

Microsoft (NASDAQ:MSFT) is undoubtedly experiencing many tremendous growth tailwinds under the current GenAI boom. The company has significantly increased its capex by more than 50% YoY over the past three quarters in FY2024. In my previous articles, I

Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. 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.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Leave a Reply

Your email address will not be published. Required fields are marked *