A ten-year low in forward P/E makes hyperscaler valuations look more than reasonable. Goldman Sachs' chart tracks Amazon, Alphabet, Meta, Microsoft and Oracle as a basket. x.com 

Rapid revenue growth makes the capex bear case harder to justify for Microsoft, Alphabet, Meta and Amazon. Their latest cited growth rates are 18%, 23%, 28% and 16% in Q2, respectively; their scale does not seem to be slowing them as expected. x.com 

Microsoft is expensive on cash flow even though its 19-22x forward P/E looks like a 40% discount to its 10-year average. Its 2.0% forward free-cash-flow yield sits below the 3.3% 10-year median, and at this point in the cycle earnings multiples mislead while free cash flow is what the market actually prices. 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 

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 

Amazon, Alphabet, Microsoft and Meta are not getting cheap; their multiples are sliding because separate monopolies are turning into one competitive market. They now spend enormous sums to sell the same AI to the same customers, funded largely by cyclical ads, on unproven returns. Microsoft faces AI eating per-seat licensing, Amazon fights in both retail and cloud, Alphabet's search premium is gone, and Meta keeps going all in for less. Markets can't price not knowing what a business will be. … Show more

Microsoft's valuation is starting to look attractive at about 22x forward earnings, a 4.5% earnings yield, for a pristine, wide-moat compounder with secular tailwinds. It remains a cash machine, funding heavy AI and infrastructure spending from its own operations while still generating plenty of free cash flow, without borrowing or issuing stock, even with shares down double digits this year. x.com 

Microsoft is undervalued alongside Meta and Nvidia, at 22.4 times forward earnings and a PEG ratio of 1.39. That compares with Alphabet at 30.8x, Apple at 30.9x and Amazon at 32.1x forward earnings, while Tesla at 180x is highly overvalued. 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 

Microsoft, Meta and Alphabet are high-quality companies that trade cheaper than the market despite AI bubble fears. The S&P 500 trades at 28 times earnings, versus 24 times for Microsoft, 25 times for Meta and 27 times for Alphabet. x.com