This investor loves Microsoft right now

Lorne Steinberg Wealth Management senior vice-president of equities Martin Cobb says Microsoft (Microsoft Stock Quote, Chart, News, Analysts, Financials NASDAQ:MSFT) stands out within the so-called Magnificent Seven as a high-quality, relatively defensive way to gain exposure to large-cap technology.

Speaking on BNN Bloomberg Market Call on March 24, Cobb said Microsoft’s recent underperformance has created an opportunity for investors.

“I just think it’s a bit silly, and it’s an opportunity to buy one of the higher quality companies in the U.S., if not in the world”

“I just think it’s a bit silly, and it’s an opportunity to buy one of the higher quality companies in the U.S., if not in the world,” he said.

Cobb noted that while Microsoft has not been a top stock performer over the past couple of years, the underlying business remains solid. He pointed to the company’s shift over time from packaged software to subscription-based software-as-a-service offerings, as well as the strength of its Azure cloud platform, which he described as comparable to Amazon Web Services Inc. and firmly established as the number-two player in cloud infrastructure.

He added that Microsoft continues to deliver roughly 10% revenue growth, while also expanding margins, buying back shares and paying a dividend despite heavy capital spending.

“So you’re getting something like 15% earnings-per-share growth,” Cobb said, adding that the stock is trading at roughly 20 times next-12-month earnings.

Cobb also said Microsoft’s integration of Copilot across its software ecosystem gives it a strategic advantage in artificial intelligence.

“I think they’ve been smart to put Copilot into its system,” he said. “Everybody who uses Microsoft is just getting used to Copilot as their agent for the day.”

That installed base matters, he said, because Microsoft already has the users, workflows and enterprise presence to scale new products quickly.

“They have the seats, they have the eyeballs,” Cobb said, describing Microsoft as a strong “fast follower” that has historically succeeded by embedding useful technology into widely used products.

He also referenced Microsoft’s exposure to OpenAI as a source of optional upside, though he cautioned that enthusiasm around private AI valuations may be overdone.

Overall, Cobb said Microsoft remains one of the names he would continue adding to among large-cap technology stocks, describing it as “almost a defensive play in some ways.”

Microsoft shares have fallen 4.66% over the past 12 months but are up 58.24% over five years. Among analysts covering the stock, 63 rate it “Buy,” three “Hold,” and one “Sell,” with a consensus price target of US$594.17.

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