When to Buy MSFT Stock?

Daniel Pronk•Jun 25, 2026

Summary

Daniel provides a comprehensive analysis of Microsoft (MSFT), focusing on why the current market pessimism is misplaced. Despite the stock being down 34% from its all-time highs, Daniel points out that the underlying business is compounding at a double-digit rate. He addresses three main bear arguments: the threat of AI to Microsoft's software business, concerns over the return on investment (ROI) for massive capital expenditures, and the company's perceived over-reliance on OpenAI for cloud growth. Daniel counters these by highlighting that Microsoft's proprietary data and distribution provide a defensible moat, while high demand for AI compute ensures that capex will eventually yield high returns once the investment cycle slows down.

From a financial perspective, Daniel emphasizes that Microsoft's operating cash flow margin is at a decade high of 53.5%. He notes that the current price-to-operating-cash-flow ratio of approximately 15.3 and a forward PE of under 19 are levels not seen since 2017. Daniel utilizes a Discounted Cash Flow (DCF) model to support his bullish thesis. Using a conservative 13% annual growth rate for operating cash flow (compared to the current 18%), he calculates a fair value of $460 and a 2029 price target of $600 per share.

Microsoft (MSFT): Daniel considers this one of the best businesses in the world and currently very undervalued. He points to the 123% year-over-year growth in AI revenue and the continued strength of Azure as primary catalysts. He believes the stock is at a decade-low valuation and presents a compelling return profile with a fair value of $460.

Amazon (AMZN): Daniel mentions that he has recently been buying a significant amount of Amazon stock. This recent allocation of capital is the primary reason he currently lacks the liquidity to add to his Microsoft position. He views Amazon as a leader in the cloud space alongside Microsoft.

Meta (META): Similar to Amazon, Daniel identifies Meta as a stock he has been actively purchasing recently. These transactions have limited his available cash, though he remains very tempted to reallocate funds to Microsoft. He groups Meta with other hyperscalers that the market has temporarily rotated away from in favor of chip manufacturers.

Mentioned Stocks

AMZN

Sentiment: BUYAction: BOUGHT

Reasoning: Daniel explicitly states that he has recently bought 'so much Amazon,' which is why he currently lacks the cash to start a new position in Microsoft.

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