Microsoft is THE AI leader, this investor says

Newman Group senior wealth advisor and portfolio manager Greg Newman says Microsoft (Microsoft Stock Quote, Chart, News, Analysts, Financials NASDAQ:MSFT)  remains one of the more attractive Magnificent Seven names despite investor concerns about AI disruption, Azure growth and rising capital spending.

Speaking on BNN Bloomberg’s Market Call on May 28, Newman said Microsoft is still a leading company in the AI transition, even as the stock has come under pressure.

“The concern here is about Azure’s growth, Copilot being underwhelming, not as good as Gemini, concerns about ChatGPT, concerns about higher CapEx, like the rest of them,” Newman said. “But management is very confident that you’re gonna see Azure growth really accelerate from here. And Microsoft 365 Copilot user licenses seem to be massively inflecting up, which I don’t think the Street is really seeing.”

Newman said the market’s doubts have created a better entry point for a high-quality company.

“So Microsoft is a leading horseman of this AI revolution. But this year, there’s a lot of doubt about that, and you’ve seen it come off quite a bit,” he said. “And, you know, you wanna buy the great companies when they’re in doubt.”

Newman said Microsoft’s valuation is compelling relative to its growth profile.

“Every time I’ve looked at Microsoft over the last several years, if you could buy it at a PEG ratio less than one, please do. And that’s what it is right now,” he said. “It’s growing at 19% and trading at 18 times. So of the Mag Seven, this is probably in the sweet spot right now.”

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