Blake

When it comes to $MSFT, people are too short-sighted. Azure grew 39% YoY, and not more (as some were expecting) because they don't have enough data centers to grow more (but let's be real, its +39% YoY!). $MSFT has to balance the compute capacity that it has with its internal products and Azure. Because internal products like M365 Copilot and GitHub Copilot have better margins, and $MSFT doesn't just want to be Azure in 10 years, they are prioritizing the compute in those places. If they allocated all the compute that they have towards Azure, they would grow +40%, confirmed on the call: "...if I had taken the GPUs that just came online in Q1 and Q2 in terms of GPUs and allocated them all to Azure, the KPI would have been over 40." There is a ceiling on how much you can grow YoY based on the data centers that you have. The demand for AI is real, and $MSFT is going to be "sold out" for some time, but there is a limit on how much you can grow based on the capacity that you have. Also, not to forget even though products like Copilot are arguably worse right now than some of the products from startups and younger companies, history has taugh us that in the end $MSFT will copy the good features and enterprise clients will choose $MSFT over the younger companies, because they trust $MSFT and because $MSFT products are already ingraved in their internal process. Yes, other startups and smaller companies will probably choose other products, but enterprises are where $MSFT dominates and where most of the money is at. Rarely has $MSFT traded at the multiple it is right now. I have added to $MSFT on this drop.