Microsoft's AI spending is producing faster growth with better economics: Azure accelerated to 48% on a $100B+ base while capex was $39.4B, below expectations. Management then guided Azure to 49-50% and said demand still exceeds supply, ending the debate over whether AI investment is paying off. Overweight, $625 target. x.com  x.com  x.com 

Microsoft's 50% Azure growth and prospect of positive cash flow in 2027 make the stock look bulletproof. Headcount cuts, lower Anthropic spend, a better Copilot routed to cheaper tokens, and coming proprietary chips and model usage add to the case. It should get Apple's multiple plus recognition for cybersecurity. x.com  x.com 

Microsoft and software stocks broadly still look expensive, because AI will get exponentially better over the next two years and the market may reset software valuations much lower. Software valuations have always been ludicrous, and heavy stock-based compensation behind many software revenues is widely ignored. Winners will emerge, but picking them is not worth trying. x.com  x.com 

Diversified cash flows in the billions make the AI-buildout basket more appealing than standalone model companies. Many members look reasonably priced and have longer records of delivering returns; Anthropic and OpenAI look much more like gambles at current valuations, though either could appeal at the right price. A possible equal-weight portfolio to revisit in five years includes Amazon, Alphabet, Microsoft, Meta, Oracle and SpaceX. x.com  x.com 

Microsoft is cheaper than it has been in a decade, trading at a 20x forward P/E, its lowest in 10 years, and it would need a 51% rally just to reclaim its all-time high. Azure and Copilot should make it one of the biggest winners of the AI era. The smarter trade is buying what the market is still underpricing rather than chasing what has already gone vertical. x.com 

Microsoft is a great business but still an expensive bet at $385, because heavy AI capex is eroding free cash flow. Capex was revised to $190B for the year, $43B above expectations, and free cash flow fell to $15.8B. Revenue grew 18% to $82.9B, operating income 20%, Azure 40% and AI run rate reached $37B, with a 47% operating margin. The average analyst target of $560 implies 45% upside only if the AI spending converts on schedule. x.com 

Microsoft is a buy right now because it is undervalued, generates strong cash flow and is integrating AI effectively. x.com 

Microsoft's strong quarter reinforces the AI trade: it is executing extremely well, and AI's productivity benefits are real, so its beneficiaries will keep investing well into the future. Its very reasonable valuation won't last, as AI slowly becomes the only game in town while high inflation slows consumers. x.com  x.com 

Microsoft is losing ground in fast AI innovation and is not cheap enough to compensate. Copilot was strong a few months ago but is no longer competitive in an agent-driven world, and the stock closed below its 200-week moving average for the first time since 2013. At about 21x forward EPS for 22% growth it is solid but not cheap, and compared with Nvidia there is little argument for allocating even 1% of a portfolio to Microsoft. x.com 

Microsoft is underpriced relative to its fundamentals, which is why Bill Ackman sold Google to buy it. Its P/E has compressed to 23x, the lowest in years, while Azure grows 39% year over year and AI revenue runs at $37 billion annualized, up 123%. A $625 billion revenue backlog supports demand, and $190 billion of capex points to future dominance, not recklessness. x.com