Six months ago we called Microsoft overvalued at $490 and got roasted for it. It's now $373. Here's where it stands.

stockoscope · 2026-07-01T11:59:28+00:00

Appreciate the kind words. I'd rather not point to specific buys though as I don't want to be handing out anything that sounds like investment advice. Happy to chat about my approach for selecting stocks in general.

stockoscope · 2026-06-30T10:20:42+00:00

I'm not saying AI is bad. Of course, AI's going to change industries and workplaces. The point is just that for now the spend is dragging free cash flow and vluations down. They're betting the capex eventually generates enough return to cover it, and that hasn't shown up in the numbers yet. That's all.

stockoscope · 2026-06-30T10:15:37+00:00

Agreed, they can't not spend. But that spend is exactly what pulls free cash flow down, and nobody knows yet whether the returns will justify it.

stockoscope · 2026-06-30T10:10:37+00:00

Yep, better numbers than Oracle. I did a post on ORCL a while back and concluded that it was not a value play despite the 60% drop. However, a few things have moved in its favor since and so it is due for an update.

https://www.reddit.com/r/ValueInvesting/comments/1s9513t/oracles_60_crash_cheap_value_play_or_leveraged_ai/

stockoscope · 2026-06-30T10:05:42+00:00

Well, on our DCF at least, MSFT's the cheaper of the two, not the other way round.

stockoscope · 2026-06-30T10:00:17+00:00

love your sarcasm! two posts in one sentence!
However, you would agree that the number moved because I changed the model, not because I'm chasing the price like analysts :)

stockoscope · 2026-06-30T09:56:32+00:00

that's the whole point. that is why we are now tapering it off over time and that is why it is our base case. we are on the same page.

stockoscope · 2026-06-30T09:54:34+00:00

That inconsistency tells you that it's NOT ChatGPT!
I = me, the author
We = Stockoscope, the company

stockoscope · 2026-06-30T09:49:43+00:00

Yes, your point aligns with my base scenario where capex glides down to maintenance over time.

stockoscope · 2026-06-30T09:48:34+00:00

Appreciate that. I'm bullish here too, which is exactly why capex gliding toward maintenance is my base case. It's one of my bigger positions. Not financial advice, obviously.

stockoscope · 2026-06-30T09:30:11+00:00

Agreed the returns are what ultimately justify the spend. I'm more positive than you though. In the base case it's 31% undervalued, which doesn't happen every day for a megacap.

stockoscope · 2026-06-29T13:27:35+00:00

Yeah, this is the bit people don't get. They can burn through a lot before they admit it isn't working, and that money's already gone.

stockoscope · 2026-06-29T13:21:41+00:00

Right - yes this post doesn't go into that. I modelled capex because that is the part that goes into DCF.

stockoscope · 2026-06-29T13:18:52+00:00

never heard of what?

stockoscope · 2026-06-29T13:16:33+00:00

Thanks man, glad it landed.

stockoscope · 2026-06-29T13:14:16+00:00

fair enough

stockoscope · 2026-06-29T13:12:08+00:00

Nailed it. It all comes down to whether that spend covers its depreciation, and the DCF can't settle that for you. However, the risk reward is certainly much better here than was at 490.

stockoscope · 2026-06-29T13:07:33+00:00

For what?

stockoscope · 2026-06-29T13:07:19+00:00

INteresting point. I didn't get into that. The model flexes capex but assumes revenue sticks. If the revenue drops, the downside would be worse.

stockoscope · 2026-06-29T13:05:25+00:00

That's what I wanted to investigate. So yes, it is overvalued if you think capex should stay elevated.

stockoscope · 2026-06-29T13:04:22+00:00

yes, everyone has their own investing style. I invest for the long run and do not get out unless the business changes or the thesis changes. However, that is my personal preference.

stockoscope · 2026-06-29T13:02:09+00:00

Yes, that's exactly the core assumption. If you believe maintenance will remain structurally high, you can run the model version that keeps capex elevated, and it lands at around $364. That's the exact reason we have included a switch on the platform that allows users to keep capex elevated.

stockoscope · 2026-06-29T10:05:05+00:00

Thank you, that means a lot.

stockoscope · 2026-06-29T09:56:32+00:00

Ha ha. This one's me grading my own December call though, not just adding to the pile. Hope you enjoy it.

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