Microsoft is down
\- 17% the past 6 months
\- 17% in the last year
\- 12% in the last 2 years
And is only up +17% since December of 2021. In the same time, their earnings have grown 73%. Thus, their P/E ratio has plummeted to a level not seen since FORTNITE SEASON 1 (mid 2017 for context). In comparison, Google traded at a P/E ratio of 28, Nvidia at 31, and Apple at 36.
Microsoft currently has the 3rd highest earnings in the past 4 Quarters of all publicly traded companies in the world. And for the future, Azure (their leading profit making engine) growth is currently \~39%-40% Y/Y and is used by 95% of Fortune 500 companies.
As for the fear of growing Capex, the overwhelming majority of spending is going directly into Azure growth. The demand is there, as Microsoft announced $627 billion in potential future revenue currently sitting in its backlog. For a company that has a net profit margin of 38%, that’s $240 billion in pure net income.
The earnings have been, and are still there. The demand is there. The route to unlocking that demand is there.
It’s only a matter of time until Microsoft regains their ground as a top global company.