r/valueinvesting
IS MICROSOFT BECOMING THE NEXT PAYPAL, ADOBE, OR UBER?
Author fears MSFT stock may become dead money due to huge AI capex and uncertain monetization, unlike GOOGL and AMZN's diversified models.
- MSFT remains a phenomenal business generating tens of billions in profit.
- MSFT products are widely used and deeply embedded in daily operations.
- Massive AI infrastructure spending relies on uncertain future monetization.
- Stock risks becoming dead money if bought at peak valuations.
- Over-reliance on a single AI product compared to peers' diversified engines.
before everyone gets angry, i am not saying microsoft is a bad company. far from it. microsoft will probably continue making tens of billions in profit and be around long after we are all gone. my concern is whether the stock itself becomes dead money.
paypal, adobe, and now arguably uber are all examples of businesses that survived and remained profitable, but investors who bought into the narrative at the wrong valuation didn’t necessarily make money.
microsoft is spending enormous amounts on ai infrastructure and data centers, and the bull case increasingly depends on assumptions about future ai monetization. copilot adoption, enterprise spending, and returns on those investments are still uncertain. that’s speculation, not a guarantee.
meanwhile, google and amazon seem to have multiple engines working simultaneously. google still dominates search and advertising while owning youtube, android, cloud, waymo, and gemini. amazon has aws, advertising, prime, logistics, and retail. both companies have ai exposure without depending as heavily on one product proving itself.
again, microsoft is a phenomenal business. i use its products every day. but great businesses don’t always make great investments. cisco survived the dot-com crash and continued growing, yet investors who bought at the peak waited more than a decade to recover.
am i crazy for thinking microsoft may follow the paypal/adobe path? great company, mediocre stock returns?
Nah, they will be fine. Remember how google was treated in 2022-23, this is the same moment for microsoft.
Still waiting for AI to destroy search
Did anyone invent MS office?
Excel sheets ?
U have no idea how big is msft moat.
Remember LibraOffice and Googles sheets? Gmail? Google drive? Zoom?
Even these products that has been around for so long aren’t displacing Office from corporate usage.
Microsoft has more optionality than any of the other players.
Infra play via Azure hosting openai and others? Yes.
Via integration with ms office aka copilot? Yes and they can pivot that same concept into all desktop Ai productivity.
If ai fizzles it won't hurt much but if it blooms they will profit bigly. Its a low risk play.
also, quantum computing. msft is well positioned if it blooms
It's like 35x FCF or something like that
ADBE is 8x
They're all shit
Not in the corporate world.
That’s literally exactly what people said about the CEO of Google 2 years ago and look at it now
Not a chance. I'm buying it hand over fist at this price.
lol my guy there’s a whole website dedicated to shit Google discontinues and it grows every month.
Who cares about product quality? They both make shitty products and people still can’t leave them. That’s the point.
Google search says 80% Fortune 500 uses MSFT 360 package, 90% rely on msft cloud services, “mister expert”
1% poster and MSFT is probably a top 3 stock with this same narrative of “it’s a buy guys but good stocks sometimes aren’t valued”.
How heavy is the bag you are holding? Did you over concentrate your portfolio?
Pick a different stock to moan about other than adobe, now, acn, or msft. The SaaS/Consultant high valuation era is over
May u or a couple amateurs. Corporations still solid with msft packages