Microsoft Faces a Key Question: Compounder at Any Price or Accumulate Slowly
Investing.com
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•By Itai Smidt
Microsoft trades at $486.72 with a P/E of 34.65, priced as a premium compounder. The company shows strong fundamentals with 18.43% revenue growth, 25.15% EPS growth, and 35.72% net margins. However, the valuation depends on three critical pillars: AI CapEx normalization by FY2028, continued Azure/AI growth at high double digits, and monetization of OpenAI/Anthropic relationships. Material risks include potential AI infrastructure overbuild, competition from Google and Amazon, and OpenAI financing/governance risks. Despite these risks, the analyst rates MSFT as a Buy given its strong financial performance and structural advantages.