‘Ignore the Background Noise,’ Says Top Investor About Microsoft Stock
The first few months of the Trump administration have seen quite a few fluctuations throughout the market. Microsoft (NASDAQ:MSFT) has certainly not been immune from feeling the effects.
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That being said, the company seems to have recovered from the April 2 Liberation Day shockwaves, and its share price has gained some 20% over the past two weeks. Indeed, the positive sentiment coming out of the company’s FY 2025 Q3 earnings call late last month was palpable, with both revenue and operating income up by double digits year-over-year.
Company management highlighted its growing AI business, with CEO Satya Nadella noting that the AI business had an annual revenue run rate of over $13 billion (a 175% increase year-over-year).
Earlier this year, there had been rumblings that Microsoft was not managing its AI investments wisely, devoting too much capital towards building up its data center infrastructure. Coupled with fears of a potential trade war, investors were worried about Microsoft’s ability to drive growth going forward.
Top investor JR Research believes these concerns were just noise, and that it will continue to pay to stick with the “King of SaaS.”
“Microsoft’s ability to justify sustained enterprise spending is a testament to the resilience and secularity of enterprise spending,” explains the 5-star investor, who sits in the top 3% of TipRanks’s stock pros.
JR points out that the capex investments are likely to peak this fiscal year, which would allow the company to focus more on downstream AI monetization going forward. The investor notes that this “is arguably more critically interwoven with Microsoft’s software strategy.”
Furthermore, JR argues that MSFT’s premium valuation is due to its ability to bundle its services. This allows the company to differentiate itself from the competition and offer more value to customers.
The investor cautions, however, that macro headwinds are certainly a clear and present danger, as economic disruptions could cause enterprises to reconsider their spending. Still, Microsoft should be decently insulated from the worst of the stormy weather.
“MSFT could still be assessed as a so-called ‘safer’ harbor amidst the trade posturing that the Trump administration is fronting right now,” concludes the investor, who is maintaining a Buy rating for MSFT. (To watch JR Research’s track record, click here)
Wall Street feels very comfortable sticking with Microsoft as well. With 30 Buy and 5 Hold ratings, MSFT enjoys a Strong Buy consensus rating. Its 12-month average price target of $506.31 has an upside of ~17%. (See MSFT stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
