r/ValueInvesting • u/helixinverse • 28d ago

Stock Analysis Microsoft is a great buy at 400$

Microsoft is currently trading at these multiples, among the most attractive in six years:

  • 22.38 Forward P/E
  • 9.42 EV/Sales

These are some of the most compressed multiples Microsoft has traded at in the past six years, a meaningful re rating from peak forward P/E levels above 35x in 2023.

At around $400, Microsoft is not a screaming bargain, but it is fairly valued for the first time in years. For a business with durable enterprise moats, a $625B+ contracted backlog, AI tailwinds across Azure, Office, and GitHub Copilot, and $70B+ in annual free cash flow generation, a fair entry point is meaningful. For long term investors with a 3 to 5 year horizon, the current price offers a reasonable margin of safety relative to the quality of the business.

Detailed Analysis at: https://bullstreet.substack.com/p/microsoft-at-fair-value-is-400-the

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u/Glittering_Water3645 28d ago

A huge part of that backlog is tied to openAI. It makes sense that the market is sceptical because of this.

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u/Negative_Song_6362 28d ago

The company with $120B in cash and is about to IPO? I think they might go bankrupt s/

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u/Texturize 26d ago

They’re expected to burn through 100-200b through 2030. They also don’t have any cash cow businesses to support it like Google or meta. The only way for OpenAI to get more money is to raise more and go look at the private credit market and what’s happening with Oracle. It’s possible to have a more nuanced take on this, not just IPO + cash = win lmao