Current EPS is 9.23 for MSFT. Stock is currently around 35 PE. Assuming 8% growth over next 5 years, at 35 PE stock will be around 520. 8% growth seems resonable given subscription model of most services. Also with layoffs/paycuts msft can increase EPS via bottom line too. If there are more buybacks they will boost EPS too. If growth slows MSFT might get to 20 PE which will be around 297. I feel below 15 PE is overly pessimistic given subscription model. So over 5 years MSFT has possible upside of 60% with downside of 10%. Is this argument valid? What are the mistakes in my thinking? (tc 175 K)
There are multitude of factors, first is net income: https://www.macrotrends.net/stocks/charts/MSFT/microsoft/net-income, it is down from ATH and recession hits it can go down further. EPS is manipulated by buy backs, which depend on net income. Lastly PE is what markets see fit, based on future growth, profit margins and risk free rate.
You don’t get it we will lose AI race we don’t even know how it is working, but yeah copilot is the key!. Face it we don’t have talents all SLT Managers to CEO are fucking fake talkers zero talent.
I feel ai will increase company profits for sure. Ppl may not prosper but companies will. There are so many front desk ppl chatgpt can easily replace and do a better job
Just face it the future is AGI and we didn’t do any AI noticeable work. So the win only if we now face our selves and attract talents and pay top $$$ for all AI talents and fire all the fake SLT and politics shit, the war starts now!
35 p/e is expensive for a company growing at 8 percent. Market pricing in reaccleration of earnings growth because nvidia guided higher, and expected for cloud ti do well. If they don’t get that the whole market will dump.
How far companies like apple microsoft can go? They are already close to 3T market cap?
@Apple : A lot higher possible. Revenue growth will be harder, yes. But fixed cost won’t need to grow as much for every dollar earned. Example: apple revenue is 400b and net income is 100b and trading at 26 p/e. Say apple grows 10 percent in two years. That’s 40b in extra revenue with higher services mix. Your gross profit is say 25b, fixed cost will not go up much, say extra 2b. Your total net income could be 123b * 26 (maintain p/e). 3.2 trillion when including buy backs. Which is a 20 percent increase in stock price (not bad) obviously, apple to 10x is hard. But apple will keep buying back stock and paying dividends which is a pretty penny. But I’m young and this kind of growth of wealth is not for me that’s why I left :-)
Take all my money💰
hold liquidity to buy the dip
Sir, this is Wendy’s.
Lol what.
Buy and hold while Satya is ceo
Yup I think he knows how to please the market
Growth should be for revenue not eps.
Current price isn’t based on current performance, it’s based on expected future performance. Tbh, I think that 35 P/E is a little high. I feel like 28-33 P/E or $265-$310 is reasonable leaning optimistic PE for MSFT. I’d do any projections based on a more typical P/E for the company rather than base it on expected growth from its ATH While it’s a solid company, I wouldn’t be excited to buy the stock at current P/E (If not for ESPP discounts)
If only the market followed logic. There are companies with lower valuation than cash reserves. There are companies with 300years of growth already factored in.
Tsla and nvda have about 20,000 years of earnings factored in lmao
20,000 human years is like 3.5 AI years. We are to dogs as AI is to us.