- MSFT’s RSI is currently at 49, indicating a neutral position. This suggests stability, with the potential for a bullish reversal if the trend shifts upward.
- Strategic investments in cloud and AI, including partnerships with Palantir, drive growth. Azure’s revenue is growing 29% annually, despite some margin pressures.
- Microsoft’s gross margin slightly decreased to around 70%, impacted by the sales shift toward Azure and rising AI infrastructure costs, highlighting challenges in maintaining profitability.
- Microsoft’s AI and security markets are expanding, with 1.2 million security customers and $1 billion in Defender for Cloud revenue, reinforcing its leadership in these sectors.
Investment Thesis
Since our last bullish coverage in late June, Microsoft’s (NASDAQ:MSFT) stock has declined by 7.5%. This decline provided a more favorable risk/reward setup because of the higher margin of safety. Despite recent downward pressure, Microsoft’s long-term growth remains intact, especially considering its strategic investments in cloud computing, AI, and enterprise software.
The current price levels offer an entry point for investors seeking to realize value from Microsoft’s ongoing innovation and market leadership. While further near-term volatility may be seen, the stock is fundamentally well-positioned to rebound once macroeconomic conditions stabilize and demand for cloud and AI services ramps up. We maintain a buy rating on MSFT, considering the recent pullback an attractive opportunity for long-term investors.
READ FULL ARTICLE HERE!
