저자: ValueInvestor채널진행자 · 외국인
요약 보기
빌 애크먼이 마이크로소프트를 매수한 배경을 다룬다. 애크먼은 OpenAI 지분 27%(약 2000억 달러, 시총 약 7%)가 밸류에이션에 반영되지 않았다고 보고, 1,900억 달러 capex를 J커브 투자로 본다. 반면 크리스토퍼 혼은 지분 83%를 매도했다. MSFT는 최근 1년간 메가테크 대비 최하위(-8%)이며, 주가 하락 4대 원인은 AI 경쟁 우려, 좌석(seat) 축소, 과도한 capex, 상업 예약 46% 감소다. 밸류에이션은 P/E 25배로 역사적 저점 근처이며, DCF 기준 기본 시나리오 328달러, 강세 413달러, 약세 210달러로 제시된다. 진행자는 장기적으로 MSFT를 선호한다고 밝혔다.
다듬은 글
Hey guys, welcome to the Value Investor Show. Bill Ackman is buying Microsoft. Christopher Hohn is selling it. Is Microsoft truly undervalued? For today's video, I want to go through why Bill is buying and Chris is selling. I want to go through how Microsoft has performed recently, as well as versus its peers.
I want to go through the four reasons why Microsoft has lacked and the four risks, basically, that exist in Microsoft's business model. I want to show you how they make money and then go through the financials before finishing off with the intrinsic value of Microsoft today. Starting off with the fact that Bill Ackman has recently bought into Microsoft.
While the market is punishing Microsoft for its $190 billion capex spend, Ackman disagrees. He sees it as a J-curve investment, where today's spending becomes tomorrow's revenue. One of the key things that Bill Ackman flagged on his long tweet is the fact that Microsoft has a 27% economic interest in OpenAI, which would represent approximately $200 billion, or 7% of Microsoft's market capitalization.
And he argues that this is not being valued into Microsoft's current valuation. Another key thing that is important to note is the fact that he views Microsoft's recent decision to restructure its OpenAI partnership not as a concession, but as part of the delivery pivot towards a more open, multimodal architecture that better serves enterprise customers.
Microsoft also recently disclosed more than 10,000 enterprise customers that have used more than one model on Azure Foundry, which basically gives developers access to these AI models on Microsoft's cloud infrastructure. This is Microsoft's bet to become the default platform where the world builds AI and not just sees it.
Now, on the other side of the spectrum, Christopher Hohn sold 83% of his Microsoft position, while he has initiated a Google position. And while Bill Ackman sold a little bit of Google and bought Microsoft, Chris is doing the completely different thing here. Now, Bill Ackman also, to be clear, said that the sale of Google was not a bet against the company, that they're very bullish long-term for Alphabet, but the current valuations and in light of the finite capital base, they use Google as a source of funds for Microsoft.
And my key takeaway from this is the following. Bill Ackman, while for many is a long-term investor, in my eyes, he's not a long-term investor the likes of Warren Buffett. Because yes, while Ackman is brilliant, his style is more like he's trying to find an undervalued or broken company, build a large stake, look for the change, ride the re-rating, and once the thesis plays out, he moves on.
And this goes against Warren's Buffett's ideology of his favorite holding period being forever. Would I be surprised if Bill Ackman money in a year sells Meta or Microsoft or Google if these three companies perform well? I'm definitely not going to be surprised. And that is why for me, Bill Ackman buying into Microsoft doesn't really excite me.
Now, Microsoft stock performance hasn't been great recently, and there are a few reasons why, but before we dive into those reasons, let's have a look at how it has performed. So, Microsoft stock rose 2.6% on May 15th, driven by Ackman's disclosure. As Bill Ackman shared the update on X ahead of Pershing Square's quarterly 13F filing.
But in a 52-week context, went from a $540 stock down to almost $350 levels just a few weeks ago. It's now currently trading slightly higher, but it's still sitting roughly 24% below its peak. While 37 analysts covering the stock have consensus rating of strong buy with an average price target of $570 a share, meaning an upside of 35% from current levels.
But overall, over the last 1 year, Microsoft has completely been lagging their max 7 direct competitors. As you can see, Google over the last year is up 138% followed by Amazon, which is up 29%. Meta, like Microsoft, is down 4% over the last year, and then Microsoft is the worst performing out of the four companies at minus 8% change in its stock price over the last year alone.
Now, Microsoft shares have fallen more than 26% because of four main reasons in my opinion. The first one is around AI fear. Investors are scared about AI competition from Google and Microsoft and are really concerned about the company's eye-popping 190 billion capital spending plan, as well as fear that this spending will not produce the desired results.
The other spectrum of the AI fears stands on the reduction in seats. M365 has 400 million users, and if white-collar workers are to be disrupted and replaced by AI, the question is, will M365 suffer from seat consolidation? And that is something that Adobe is suffering from as well, as well as other SaaS companies.
The third is the massive capex scaring the market. As we said, Microsoft is on track to spend 190 billion for calendar year 2026, up 61% from 2025, and that is subject to increasing the next year as well. And the market just hate the uncertainty around whether that spending will pay off in the long term.
And the fourth thing is the shocking commercial bookings number. In the third quarter of the fiscal year 2026, Microsoft commercial booking decreased by a staggering 46% on a constant currency basis due to lower commitments, which was actually driven from lower commitments from OpenAI following up their deal.
That spooked investors even though the actual revenue numbers were very strong. Now, before we look into the revenue numbers, the financials, and everything in between, you have to understand where the revenue comes from. Starting with the fact that Microsoft is primarily based off intelligent cloud and productivity, which virtually come neck and neck in size, and together they make up 84% of their revenue.
Intelligent cloud is basically Azure, server products, GitHub, and that makes 42% of their revenue. Then you have productivity and business process, so that's everything from M365, LinkedIn, Dynamics, Copilot, which makes 42% of revenue. And then you have the personal computing, which is Windows, Xbox, Surface, which makes 16% of revenue.
Personal computer is actually declining year-on-year. It's the smallest and slowest segment, but then intelligent cloud is growing 30% year-over-year, Azure even higher at 40%, and then productivity at 17% with M365 commercial at 19% year-on-year growth. Now, let's look at Microsoft's financials before we look into Microsoft's intrinsic valuation.
Starting off with the year-over-year increase of the three product lines that we've talked about. So, as you can see, intelligent cloud is basically what has been driving up and increasing the top line extensively the past few quarters, then followed by productivity and business processes, which has remained relatively stable in roughly 12 to 15% year-over-year revenue.
And then personal computing revenue, which has also seen some decline the last quarter. In terms of revenue, net income, and free cash flow, Microsoft is a cash cow machine just like the other Mac 7 companies. By 2028, Microsoft is expected to do 450 billion in revenue and over 167 billion in net income.
In terms of operating leverage, the company has significantly improved their operating leverage. That stems from the fact that they have increasingly improved their bottom line through reductions in R&D, in sales, and marketing. However, their cost of sales has seen some rise, which has in fact reduced their gross margins over the last 2 years.
And that is primarily due to the higher cost of doing business. Stemming from their business lines like Azure, their data centers, etc. Now, in terms of valuation, the company is trading at one of the lowest and more attractive valuations it has ever traded. Their P/E ratio is currently sitting at 25, which is very close to the lowest it has ever recorded of 21.
Their price to sales is currently at 9.8, but keep in mind that this is a high net margin business. While, yes, this is higher than the minimum, it's still much lower than what it has historically traded since 2021, which was more than 10 price to sales. And then price to free cash flow actually remains elevated, and that is in fact because free cash flow has been affected by huge CapEx spending.
And that takes me to the last part of the video, which is Microsoft's intrinsic value. So, for the intrinsic value for Microsoft, my assumptions for the base case is a revenue growth CAGR over the 5 years of 17% and a net income and free cash flow growth of 19% with a P/E ratio of 25. My bull case assumes 21% top line and a bottom line growth of 25% for net income and free cash flow growth at a P/E ratio of 35.
And then my bear case a 12% revenue growth and a 10% net income and free cash flow growth at a P/E ratio of 18. So, my bear case actually assumes declining margins. Starting off with my base case, in my base case scenario, the intrinsic value with the DCF method sits at $328 and with the EPS method at $1,000.
The reason why the DCF method provides such a low number is because Microsoft is expected to continuously increase capex into the next few years, and as a result, free cash flow will be suppressed. And as a result, the discounted cash flow method provides a lower intrinsic value. However, with the EPS method, the margin of safety is very big.
In my bare case scenario, the intrinsic value changes significantly because while with the DCF method, the intrinsic value is at $210, with the EPS method, this has dramatically reduced to $487, giving just a margin of safety of 13% with the EPS method. And finally, under my bull case scenario with the DCF method, the intrinsic value is at $413, and with the EPS method, $1,800, giving a massive margin of safety of 46%.
So, the question for me on whether I would invest in Microsoft is are Microsoft investments actually going to pay off, or is all this capex spending going into waste? I'm more leaning into Microsoft this year for the long term. I do believe in Microsoft. I think it's a huge company with an unbreakable moat.
However, the other risk that you have to think about is seat consolidation in the white-collar job space, and whether that will affect M365 and its ability to grow revenues the way it has been in the past. Thank you all so much for watching, and I hope to see you in the next one.
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