Microsoft (MSFT) Is Not A Great Value
MSFT’s 44x EV/Free Cash Flow, 25x EV/Operating Cash Flow and 11x EV/Revenue multiples are not exactly low.
When you consider that MSFT Revenue growth is not accelerating, that Cap Ex is becoming a larger percentage of Revenue as MSFT invests in data centers to support OpenAI, and that MSFT share repurchase activity has declined, why would one pay top dollar for MSFT?
Because you do not want to miss on MSFT’s Gen AI story? MSFT is OpenAI’s Gen AI back office. MSFT’s LLM IP is weak compared to OpenAI, Anthropic and Google. MSFT does not have a Gen AI story. It rides OpenAI’s Gen AI coat tails.
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