Microsoft: Cloud And AI-Driven Stability

First Principles Partners1.69K FollowersFollow5ShareSavePlay(12min)CommentsSummaryMicrosoft (MSFT) is well-positioned for AI-driven growth, with Azure and cloud services seeing 40% YoY expansion and a $625 billion commercial backlog. MSFT’s aggressive AI and data center investments have pressured near-term returns but are justified by a 26.09% ROIC, outpacing its 8.9% WACC. Intelligent Cloud revenue surged 28.82% YoY, driving net profit up 28.58% to $119.26 billion and supporting a bullish outlook for FY2026 earnings. Despite a lower P/S multiple (10.06x) versus peers, MSFT’s stable margins and dominant market position suggest undervaluation and continued upside potential. lcva2/iStock Editorial via Getty Images Introduction and Investment Thesis I am bullish on Microsoft Corporation (NASDAQ: MSFT), driven by Azure and its cloud services. This AI segment is currently seeing about 40% growth indicating that AI adoption is onThis article was written byFirst Principles Partners1.69K FollowersFollowFirst Principles Partners is an equity research analyst specializing in technology, innovation, and sustainability investment. My unique approach, "First Principles," involves breaking down complex problems to their most basic elements in terms of financial and technology, enabling me to uncover overlooked investment opportunities.With a strong background in investment, private equity and venture capital, I have a proven track record of delivering strong returns for readers. Articles on Seeking Alpha focus on emerging technologies, sustainable investing, and the intersection of innovation and finance. I am passionate about sharing insights with a wider audience and learning from fellow investors. Together, we can drive positive change and contribute to a more sustainable and innovative world.Analyst’s Disclosure: I/we have a beneficial long position in the shares of MSFT either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.