"If you've been waiting for an opportunity to pick up shares of Microsoft (NASDAQ:MSFT) on the cheap amid broad AI and tech jitters, here's your chance. The stock has been beaten down in recent months, now off more than 12% from its recent all-time highs. And while the still seemingly frothy 33.89 times trailing price-to-earnings (P/E) multiple doesn't seem to suggest Microsoft shares are a "table pounder," I do think that the premier hyperscaler remains one of the best bets of the Magnificent Seven."
"Of course, its close ties to OpenAI used to be a positive. Nowadays, it's a negative, with ChatGPT losing a bit of ground in the AI race to the likes of Alphabet (NASDAQ:GOOG), which has seemingly caught up with the release of its well-received Gemini 3.0 model. But just because Google Gemini and the hardware running behind the scenes (Google TPUs) are having their moment, it does not mean we should start treating OpenAI as a laggard."
"AI spending fears are weighing on the hyperscalers, Microsoft included Sure, but just because we've got reminders of the internet bubble and dot-com bust does not mean we're in for an exact repeat. Of course, heavy debt loads and extreme spending might be a concern for many. And circular dealmaking in the AI scene makes things a tad trickier and perhaps scarier for those with AI bubble fears."
Microsoft shares have fallen more than 12% from recent all-time highs and trade at a trailing P/E of 33.89. Microsoft remains a premier hyperscaler and a leading Magnificent Seven pick despite market jitters. Close ties to OpenAI have shifted from a positive to a liability as ChatGPT has lost ground to Alphabet's Gemini 3.0. OpenAI faces concerns about heavy debt and circular dealmaking. AI spending fears weigh on hyperscalers, but successful AI investments could make leverage highly advantageous. Microsoft is making investments to reduce dependence on ChatGPT.
Read at 24/7 Wall St.
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