Microsoft Corporation (MSFT): A Bull Case Theory

We came across a bullish thesis on Microsoft Corporation (MSFT) on Substack by Ray Myers. In this article, we will summarize the bulls’ thesis on MSFT. Microsoft Corporation (MSFT)'s share was trading at $453.13 as of May 15^th. MSFT’s trailing and forward P/E were 35.02 and 30.21 respectively according to Yahoo Finance.

Microsoft is a dominant force in enterprise productivity software, with products like Windows, Office, Teams, and SharePoint deeply embedded as the standard tools in corporate environments. These offerings generate high-margin, sticky, and recurring revenue, making Microsoft a reliable cash-generating powerhouse. Beyond software, Microsoft has established itself as a major player in the gaming industry through key acquisitions such as Minecraft, Bethesda, and Activision Blizzard. This portfolio of valuable intellectual property positions Microsoft to become a leader in video game streaming, aiming to transform the industry much like Netflix did for movies and TV shows. Central to this ambition is Microsoft’s robust cloud computing platform, Azure, which benefits from the ongoing global shift toward digital transformation. Currently, only about 15% of global IT spending is allocated to the cloud, leaving vast growth potential as this share is expected to significantly increase over the coming decades. Furthermore, Microsoft is heavily investing in artificial intelligence, integrating it across its product suite to drive innovation and competitive advantage. Also, explore the ways Meta Platforms, Inc. has embedded AI infrastructure into its operations.

Although Microsoft’s stock trades at a premium valuation of around 34 times earnings, the company’s strong fundamentals and exposure to multiple high-growth technology trends justify this premium. With a projected revenue compound annual growth rate (CAGR) of 12% and improving margins, investors could potentially realize an 83% return by 2030. This combination of entrenched market leadership, strategic growth initiatives, and long-term secular tailwinds makes Microsoft an attractive, low-risk investment for patient investors seeking stable growth over time.

Microsoft Corporation (MSFT) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 317 hedge fund portfolios held MSFT at the end of the fourth quarter which was 279 in the previous quarter. While we acknowledge the risk and potential of MSFT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article was originally published at Insider Monkey.