When To Buy MSFT Stock Right Now?

[00:00:00] Speaker 1: We have to talk about it. What is going on with Microsoft? What's going on, guys? It's Ricky here with another market update. I wanted to quickly talk about one of the largest companies that's publicly traded, but it's been getting absolutely destroyed really for the past few months, not just weeks. With that being said, again, the question everyone should be asking is, is now a decent time to invest in Microsoft as we retest a very common support range? 350, you could date back to over a year ago. This was March during the tariff war when overall markets began to sell off. We tested lows of 350. We tested them again around that same time this year. And then now we're retesting them once again. Now, the biggest thing that I would look out for, very similar to what I talked about in yesterday's video when I broke down Palantir, is that remember, overall markets are still trading nearly at all-time highs. So if you are bullish on the overall market and you believe they're going to continue to uptick, then that could provide the environment for something like Microsoft, right, to begin to recover. With that being said, there are some concerns fundamentally that I think that we should be aware of, and I wanted to share them with you. I want to remind you that what I share with you today isn't where you should stop. Please look more into it. If you have something that you think is really good or something to look out for that might be bad for Microsoft, share it down in the comments section. We would love to learn more. Let's go ahead and jump right into it, right? When looking at Microsoft, again, it's one of the max seven companies. It's one of the most valuable companies that's publicly traded. It's $2.77 trillion. It is down a pretty significant amount. From the overall highs of $550 per share, it did hit lows of $350. That is a 36% drawdown, right? Pullback. I mean, that is bear market territory. With that being said, it is currently down 32%. It is testing a very common support range so I can see, technically speaking, why it's so attractive. The thing that I do want to share with you is, yes, this is also a long-term position that I have for myself and for my daughter, my son, my lady, for everyone. So does this mean that everyone should just buy more? No, because it is selling off for a specific reason, right? And just because I choose to invest in something doesn't mean that you should, at least not right now. Just like I said, right? The overall NASDAQ market is incredibly bullish, but also overbought. If we break the support based off of a recent update, right? You guys heard the news over the weekend. Supposedly, the U.S. is now attacking Iran again. This might be the break of the ceasefire. Hopefully, Trump goes back to his Sunday peace deal offering, and we'll see. Hopefully, that can not cause markets to continue to sell off in favor for the bulls, right? But if escalations do continue, if inflation continues to rise with rising oil prices, If labor market continues to get weak, and if the Federal Reserve actually does do a rate hike, not a cut, that is bearish. All negative sentiment, right? We could see a break of support. And then if overall markets begin to draw down, what do you think is going to happen to Microsoft? Remember, Microsoft will not be an exception to this. It will also sell off further if overall market sentiment is bearish. It is down 32% from previous all-time highs while markets are trading nearly at all-time highs. Microsoft, as of right now, is being left behind for a specific reason. And this is what I wanted to share with you, right? We talked about it technically, a common support range. We talked about previous highs, the current drawdown, why it's attractive. It's a Mac 7 company. Now let's talk about the fundamentals. Again, the software that I'm going to be using, you don't have to, but if you want to follow along, it's called Investing Pro. It's the first link in the description down below. It is an affiliate link, but you'll get 50% off. It breaks down to less than $10 a day. Sorry, $10 a month if you want it. If not, it's cool. Again, I'm going to break it down for you. Investing Pro allows me to dive a little bit deeper into it. Based off of fair value analysts, right? 55 analysts, they have a fair price target of right around $472 per share. It's currently trading at $372. So according to this, and again, this isn't perfect. According to this, it says it has 26% upside. Okay, that's good to know, right? When we look at some of the kind of like the financial health indicators, cash flow, healthy, growth, healthy, price momentum, not healthy, right? It's been on a downturn. Profitability health, in my opinion, one of the most important parts fundamentally. Healthy, super healthy, four out of five. Relative value, two out of five. Again, not very good. What has been the biggest change? We'll talk about that in just a little bit. But again, it's sentiment. All these downgrades by analysts have been driving Microsoft lower. We'll talk about why it's being downgraded. How much of a premium are you paying to buy Microsoft right now? When looking at Microsoft, it has a P ratio of 22.1 times its earnings. Technically speaking, as a big tech mag seven company, that's not very expensive. It's not the lowest. I believe, let me double check. I believe Meta is the lowest as of right now, which we can do a whole nother video just on Meta. It's at 19.8. It's definitely not the most expensive, right? We got Tesla for that. Tesla's trading at 369 times its earnings. But when you look at Microsoft, Microsoft is currently at 22. And in comparison to many of the other semiconductor or AI chip stocks, this is a bargain. Now, statistically speaking, you normally want them around 20 to 30 for a big tech company. That's normally what it trades at. It's not bubble territory, but it's also not super, super cheap. I want to be open with you, right? Revenue, $318 billion. Again, this isn't this bullshit AI company that just started off and has a lot of hype. No, this is Microsoft. It's a Mac 7 company for a reason. Do not compare it to the ones that are just getting started. It's not like it, right? Net income, $125 billion. No, we're not talking about its market cap. We're talking about the actual profit that this company makes per year. Again, Microsoft is different. Understand it. That is why it trades at such a large value. It's not a hyped up stop. It's not super sexy. It's not like it's throwing itself at you and saying like, look, AI, AI. No, no, no, no. That is not Microsoft. Microsoft is established. It's consistent and it's reliable. Fundamentally, it's a very well ran money printing machine. And that is why I feel comfortable investing in it. Doesn't mean that you should, right? But is it super sexy? But no, right? That is not really what Microsoft is experiencing in 2026. Last year, it did. It kind of ran with the AI hype, right? As again, it began to invest heavy into AI. But when we click on the pro research, again, one of my favorite parts about investing pro is that you actually get to visually see the growth. I'm not talking about the growth on the price. Bullshit companies can have amazing growth based off of their price, right? Look at Intel. Again, Intel is one of the few semiconductor companies that I just don't believe in. That's just my opinion. I think it's all hype. But also, we can talk about another one. What's another bullshit company that's being hyped up a lot right now? Well, maybe not right now, but MicroStrategy. MicroStrategy, when it ran up to $500, now it's trading at $86 per share. Again, any company can be pumped. That doesn't make it special. The difference is, can it not only have great price performance, but could it also have great fundamentals? Amazing growth quarter after quarter. Remember, this isn't a super sexy stock, at least not traditionally speaking, in the sense of what everyone else is talking about. It's an established company, and I think that's why it doesn't get its flowers in that sense. But there are some concerns that I believe you should be aware of. I just wanted you to visually see the growth that a well-established company is still experiencing even during this whole AI boom. Very attractive revenue growth. When we look, again, what I talked about in yesterday's video, if you didn't watch it about Palantir, one of my main focuses when I ask myself, what do I want to look out for when I'm investing in companies? I'm not trying to look for reasons to invest. I'm trying to look for reasons to not invest. I'm trying to look for the red flags. So when you scroll down, you can see that there's the bear case. I love it because I want to be aware of what are the concerns, what are the risks that are currently presenting themselves for Microsoft that is drawing the stock lower. Capital expenditure reached $31.9 billion in Q3. They're spending a ton of money on CapEx because of AI. This is a big concern for Wall Street right now, right? With what we saw in the South Korean market and them aggressively selling off because of the possible overspending. Again, that is a big concern because a lot of these companies can be overspending with maybe very little in return to be promised. The second thing is supposedly cloud gross margin declined to 66% gross margins in Q3. Still incredibly attractive, right? Again, we're talking about a company that prints $125 billion. It's trading at a low premium. And this is the part that I find to be very silly is that they are so critical in big companies like Microsoft, but yet so lenient on bullshit companies like Intel that doesn't even come close to the actual profit that Microsoft makes. But again, it's the growth story. They can hype up Intel because it was doing so terribly for such a long period of time, pump up the stock, dry it out, and then leave it to dry and then come back to Microsoft and pick it up at a bargain. And that's what I believe is happening. Microsoft has always been a safe play. Right now, there's some attractive and growth stocks. I don't want to call Intel a growth stock. It's just more going through its growth stage because of the pump that it's experiencing from the Trump administration. They're able to ride that pump, make the money, take profits there, and then circle back and be able to put it back into a company they know is reliable. And then that's going to be Microsoft most likely, right? Sentiment. 18 of 25 analysts have revised EPS estimates downward over the past 90 days. There's beginning to be a sentiment shift when it comes down to Microsoft. This is also a big thing. Pretty much the big focus right now when it comes down to Microsoft is the regulatory issues that it might be experiencing in Europe. With that being said, if it is able to help aid that, then that is where less uncertainty can begin to remove itself, right? Or more uncertainty can begin to remove itself. Other than that, there's the CapEx spending and then the change of sentiment, which is obviously all the analysts, right? When I went ahead and I asked Warren AI, what is your take on Microsoft, right? What is the main reason Microsoft stock is crashing? For those that don't know, Warren AI is pretty much like the chat GPT version for Investing Pro. And in a very simple way, again, you can feel free to do this yourself, but it says regulatory fears and margin warnings. They are concerned about the shrinking margins, right, that we talked about in the reserve, right? It's only 66% now. But remember, they're so critical with these margins for a company that's not even trading at a big premium like Microsoft, but yet so lenient on companies that are trading at 200, 300 times their actual earnings, and yet they're barely making any profit. I just, I find it to be very convenient in the sense of, well, yes, of course, the sentiment is bullish in those AI companies or those semiconductor stocks for now. But then eventually, when they pump them up to a point where no one else wants to buy them, then they're going to choose to be critical. Oh, yes, they are overvalued and then circle back to this company. And all of a sudden, sentiment is so bullish for Microsoft, right? So the market is re-rating Microsoft, not for what it is, but for what it might have to become in a new regulatory era. Again, a big focus right now for Microsoft is the regulatory issues that it's currently experiencing. High volume and analyst downgrades suggest that the pain could linger until there's clarity from the business. So again, something to pay attention to when there will be a change of sentiment. The P ratio, 22 times, net income, 36%. It pays dividends and a market cap is 2.77 trillion. Again, still elite, an amazing dividend, and a reminder that the giants can still stumble too. And I think that is a great reminder. Microsoft has always been kind of that stock that does well, but it is always one that kind of does take a hit while the rest kind of run more off of the hype. In my opinion, I'm comfortable investing in Microsoft. I know that there could be more downturn if it breaks the support, like there's no reason not to acknowledge it. If it breaks the support and overall markets begin to downturn, Microsoft can trade lower. And that's one thing you need to acknowledge, that there could be more pain before there is at any actual gain. But that is the thing to kind of ask yourself is that, well, first off, you shouldn't be in a rush to buy into this, right? We should really be looking out for, hey, are markets actually going to begin to recover? And does price action actually show signs of a recovery for Microsoft? And if those criterias are met, then I could feel more comfortable investing into it. With that being said, if we see that overall markets begin to downturn, Microsoft comes back to retest same previous support level, let the thing sell off. Why are we in such a rush to buy a stock when we can possibly get it for a better deal? That is the thing to always remind yourself. But again, when you look at the charts, you might not understand that. But when you look at the company fundamentally, it might begin to make a little bit more sense of, again, charts can only tell you so much, which I think is really important because you're paying attention to price momentum and direction, which I think is a key component, especially in 2026 and 2025, when it comes down to trading and investing successfully. It's been if you have a good story and good price momentum, it's been if you have a good story and good price momentum, you can do exceptionally well. Right now, it just looks like the sentiment is beginning to change. Fundamentally, Microsoft is still a great company. There are some things to look out for, like we talked about the regulatory possible issues in Europe. But nonetheless, I think it's a good watch and something that I would definitely consider adding more to, especially at these oversold levels, right? And we're talking about investing, not trading. So you guys let me know down in the comments section what you think. Again, I hope that I did a decent job breaking this down. Like I said, the software that we use today to break down the stock fundamentally is called Investing Pro. It's the first link in the description down below. But most importantly, do not forget, we will be trading live tomorrow right at Market Open. And whenever you're ready to tune on into those live sessions, please click that second link in the description down below. Learn more about our LPP team and see if it's a good fit for you. I appreciate your time. Like always, let's make sure that we end the year on a green note. Take care, team.