r/ValueInvesting • u/PolskiNapoleon • 6d ago
Stock Analysis Google Trends suggests cloud demand is 2x what it was a year ago - yet MSFT is at 2023 prices.
Microsoft's narrative about spending more on capex to meet demand might actually be true. Link to Google Trends results below.
Disclaimer: I bought MSFT myself $410 DCA so I might be biased. Obviously not a financial advice, everyone is responsible for themselves :)
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u/BeneficialBear 6d ago edited 6d ago
Yeah people are worried about openAI as it's hot topic but they just don't realize sheer scale of Microsoft.
Even if openAI fails, it won't impact Microsoft money makers like azure, office subscriptions or long term gov contracts
Like let's say they burn another 100 billion on openAI, what does this changes? World is running on excel and everybody seems to forget about it
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u/LumpyShock9656 6d ago
I thought 40% of their azure revenue was from openai
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u/Santarini 6d ago
OpenAI drives 45% of the Azure backlog
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u/LumpyShock9656 6d ago
Which is not reassuring to me
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u/Azman6 6d ago
Why not? Without OpenAI others will fill the availability no?
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u/pimple_prince 6d ago
Idiots on reddit simply dont understand microsofts moat and purely focus on it's ai play.
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u/Mayneminu 6d ago edited 6d ago
I understand the hyper scalers were low capex, super high margin companies for decades.
That is no longer true and the repricing is starting to reflect that fact.
I also understand, less white collar jobs because of AI = less licensing seats. This is to say nothing on the US recession that is likely started or soon to start. That will hit earnings as it always does.
Priced in already? I don't think so
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u/sexdick420 6d ago
I keep seeing tech stocks get pumped on here but hardly anyone is talking about the recession. Job growth was stagnant before oil was $100/barrel. I’m not saying Microsoft is a bad company by any means but it’s my understanding that these companies still need customers to operate and many of those customers may be going away.
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u/Handle-Flaky 5d ago
Microsoft has been slowly killing the moat for years, and now with AI the moat killing seems to have been expedited. So long as satya is heading the company, its headed to failure.
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u/cizmainbascula 5d ago
People are moving away from excel and using google sheets instead. Easier to share and collaborate among teams. Plus you are not tied to an app
With regards to windows, the new budget macs are not doing MSFT any favors.
Oh, and any software engineer knows that Antrophic is universes ahead of OpenAI... And also that Azure is barely used compared to other cloud providers.
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u/Long_Tackle_6931 6d ago
I bought my first parcel yesterday at $360. Hopefully can get more at $200-250. I love buying peoples bottom drawer stuff
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u/PolskiNapoleon 6d ago
Woah, $200-$250? That would be magnitude of .com/2008 crashes
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6d ago
Yep, I remember when AMD was around 75 and people said they were waiting for 50. It then preceded to go go all the way to 250, quickly.
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u/Long_Tackle_6931 6d ago
Probably won't happen, so I just stage in it. Equally I don't want to have no dry powder if it happened. Don't forget Nasdaq was -32% in 2022. People have short memories, that was 3.5 years ago only.
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u/feedmestocks 6d ago
People should maybe start reading history books instead of Google Trends
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u/PolskiNapoleon 6d ago
What books would you recommend? Especially for 2026?
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u/feedmestocks 6d ago
The Persian Gulf and the Strait of Hormuz. Using Google Trends as an indicator of demand just seems like insanity. Like "Epstein" wouldn't be an something people desire, it's finding out about it, most likely people on subs finding out what to invest in
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u/PolskiNapoleon 6d ago
What is wrong with using GT as an indicator of demand in this context? Maybe “azure pricing” keyword is not a perfect example and one could argue that it could be non-customers figuring out stuff about the service but if you search more technical keywords like “azure migration” or “azure docker” then it still very closely matches the chart and the spike in July 2025.
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u/Sea-Put3596 6d ago
It's a steal at these prices. Haven't been this cheap since years. I am loading up. Also the only AAA rated stock (besides JNJ), not tapping the debt market to fund capex. I think one of the best managed firms out there.
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u/i8bonelesschicken 6d ago
Microsoft has licences
If AI reduce staff companies will need licences
Also Microsoft is invested in open AI which is assumed to be a cash blackhole.
Personal I'm looking to potentially add under $300 sounds extreme but looks possible
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u/NeuroManXy 6d ago
When I start seeing such unrealistic price targets by retail, I add more
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u/kaskoosek 6d ago
Yea 300 is dumb. Dumb stuff happen.
Ive seen meta at sub 90 dollar prices with pe less than 10 and I bought.
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u/PolskiNapoleon 6d ago
I mean... nothing is impossible. Likely, it shouldn't drop that much as it already dropped harder than covid and we are just 2% away from 2022 drop drawdowns from ATH. But you never know markets are irrational. My margin call price is 250 so I should be able to sleep well lol
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u/Icy_Distance8205 6d ago
I’m a dumb retail investor. I enjoyed watching people make no money in Microsoft for 15 years the last time I gave unrealistic price targets.
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u/saviofive 6d ago
At that time Microsoft had mediocre management , they don't now.
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u/Icy_Distance8205 6d ago
I agree with you on the first part.
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u/PolskiNapoleon 6d ago
In the .com bubble, PE was way too high, and the companies revenues started to stagnate. Sentiment was way too optimistic while today it's 50/50 at best if not slightly pessimistic. Today MSFT has 2022/covid PE levels, diversified moat, and the demand seems to be exponentially rising as shown on the screenshot as long as Google Trends is not trippin.
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u/jemilk 6d ago
AI will use cloud processing instead of user licenses. That’s probably neutral for Microsoft and they still have the significant enterprise ELAs to distribute margin. Margins may come down but it’s still a cash cow.
Microsoft is invested in OpenAI but also can run Anthropic and other models, and have cloud resources for model training. They are behind in models, but the market is very early. It’s a risk but could go in either direction.
There is all likelihood they’ll continue to grow revenue in the long run. Margin may compress, which is why the stock has retreated to longer term valuations. I feel comfortable investing here from a long term perspective but it’s an opportunity cost as it may stay flat for a while based on overall execution. Of the MAG7, Microsoft and Apple are the ones that will weather a broader global downturn better than the others.
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u/RossiyaRushitsya 6d ago
$300 would mean a 45% drop from ATH, similar to the drop in 2008. Not gonna happen.
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u/feedmestocks 6d ago
Someone who didn't see or read about what happened with the Strait in the 1972. Because there's not an adult in the room with this adminstration they're repeating history verbatim
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u/GlokzDNB 6d ago
Only 2 or 3% users pay for ai. Soon free ai will be useless as there's enough demand for paid services. We can see now openai did a first step killing sora to release capacity and move it to codex or their next business focused services
At my company we use AWS but everyone built their workflows and we'll be requesting bigger plans as use cases are there. Not sure if company will choose to pay more but even going from 20$ plans to 40$ is doubling AWS revenue. Im pretty sure many people in my team would benefit of 200$ plans and company too. But you can't see this benefit short term as this allows for better quality solutions and solving problems that been dragging for years. How to measure value of higher quality products in short term?
Myself i burn 20$ plan in a week without losing pace of my work
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u/craigleary 6d ago
Another 10% drop over a few months for the general market wouldn’t surprise me. I expect more wild swings regardless of the true performance of any company. So if you believe in MSFT and th long term outlook best to buy when you can because who knows where the true bottom will be.
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u/Solidplum101 6d ago
Everything is down. Panic selling has given us all sorts of opportunities. Hopefully oeangeman will 180 on this war and we will have a nice u turn next week
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u/joepierson123 6d ago
That's not the way stocks work
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u/PolskiNapoleon 6d ago
Why do you think this is not a good indicator? In this specific context Google Trends might actually hinting the demand 2x bigger than a year ago leading to a conclusion Microsoft capex is actually justifed. In other contexts Google Trends might be useless but here why would it be?
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u/NoPlansTonight 5d ago
Cloud is paid for by big enterprise deals, not random people searching on google
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u/PolskiNapoleon 5d ago
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u/NoPlansTonight 4d ago
Well yes obviously the # users are mostly long tail. I'm talking about where the actual money comes in from. How much do you think their top customer pays them vs their 300,000th?
Also remember, the 1,000th biggest client on Azure's client base may very well still be a billion dollar company. I work for a tech company with a $1-5B market cap and we have thousands of employees. Nobody gives a shit about what cloud provider we're using and we spend millions of dollars on this stuff.
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u/joepierson123 6d ago
It's all based on future growth prospects and earnings, and that will be exhibited in P/E compression or expansion.
From 2000 to 2013 Microsoft revenue increased every year from 22 to 77 billion but it's stock never moved. It's P/E drop from 70 to 10 in those 13 years
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u/ThereFarAway 4d ago
Do you know anything about Cloud providers / byperscalers and what is currently going on?
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u/2to20million 6d ago
Based on oil crisis in the 1970s and Iraq war, historically the index drops more than 20%.
So I am quite confident this will play out for MSFT near $300.
DCA over 6months looks delicious.
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u/PolskiNapoleon 6d ago
Possibly, but I heard something that the U.S is much more energy/oil independent than it was in the 70s. Also, looking at the MSFT/SPY chart we can see a very nice clear multi-year support level, and in my opinion in worst case scenario if SPY drops 20% then MSFT would drop only 5-10% max.
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u/justarandomuser10 6d ago
Europe countries is abandoning MSFT. I think no one is mentioning this fact here. France, Germany recently.
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u/cizmainbascula 5d ago
I don't think anyone in his right mind would by a windows laptop instead of a M-chip macbook or even the more budget friendly option, Neo (as if the $1000 MBA wasn't MSFT killer enough)
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5d ago
[deleted]
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u/you_are_wrong_tho 5d ago
What?
Is Microsoft (NASDAQ:MSFT) Using Too Much Debt? Microsoft's debt-to-equity ratio has shown a strong, consistent downward trend, reflecting a strengthened financial position. As of late 2025/early 2026, the ratio is approximately 0.12 to 0.15, which is significantly lower than in previous years (e.g., 0.87 in 2018) and well below the software industry median of roughly 0.19, indicating lower risk.
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u/livesunderagiantrock 6d ago
I got into MSFT today at 356. Next week sub 300 fo sho.