The “Meh” Case For Microsoft

I've seen a lot of comments lately about how MSFT is one of the most obvious buys in the market at sub-400 levels.

I've been following MSFT pretty closely for years now, having bought shares when it was $70 in the summer of 2017 and holding them all for almost a decade, selling them last year. I really don't see any major growth drivers for MSFT any time soon.

-Azure growth in general is stalling. Microsoft became the exclusive cloud provider to OpenAI way back in 2019, and the stock took off from there. But Azure market share peaked in 2024 and is not growing at the rates of its peers. Recently admitting 45% of their revenue backlog is currently OpenAI projects yet to prove profitablility was not a great look for the company's overall balance sheet.

-Users seem to really dislike using Copilot compared its potential competitors. The conversion rate for Copilot has been much lower than analysts originally hoped for/modeled out. It's repeatedly viewed as a frustrating experience and the Copilot adoption issue doesn't appear to be going away any time soon.

-Gaming/legacy sector revenue was down 9% YoY, not a huge deal but also not want you want to see in any sector of a potential growth stock.

The stock seems pretty fairly valued to me at the moment, as the world waits to see if Altman and OpenAI can actually deliver on a lot of unfilled promises. They are a still a great company and will survive either way, but if OpenAI fails to deliver massive ROI then it could take a while for the company to pivot into their next major growth phase.