Posted 2/24/2024, 11:15:00 AM
Microsoft Poised to Lead AI Push with Copilot and OpenAI Despite Risks
- Microsoft well-positioned to capitalize on AI opportunities with products like Copilot, GitHub, Azure AI, and acquisition of OpenAI
- Strong balance sheet with $80B cash and $44B debt; Azure continues rapid growth around 30%
- Very high return on invested capital (ROIC) of 31%; wide spread compared to cost of capital
- Valuation analysis suggests 50% upside over 5 years if historical EPS growth continues
- Main risks are alternative AI technologies disrupting Microsoft's early lead and mixed initial Copilot reviews