Microsoft cheap from neglect, not flaws

TL;DR

Microsoft stock is the worst performer among Mag 7, down 18% since August with no fundamental problems.
Trades at 9.4x forward EV/Sales and 24x GAAP P/E, cheapest in peer group amid slow Copilot adoption.
Cheapness comes from market neglect and AI risks, not company weakness, ahead of April 29 earnings.

The story at a glance

The Techie argues Microsoft (MSFT) stock has become cheap due to lost market favor and slow AI progress, despite solid fundamentals. This comes as the stock lags peers after recent declines, with Copilot at just 3.3% penetration in Microsoft 365 seats and OpenAI partnering more with Amazon. The piece highlights the upcoming April 29 earnings call as key.[[1]](https://seekingalpha.com/article/4891317-microsoft-cheap-for-all-the-wrong-reasons?mailingid=45243623&messageid=2800&position=rta_analysis_control_main_0_title&serial=45243623.9620)[[2]](https://seekingalpha.com/article/4891317-microsoft-cheap-for-all-the-wrong-reasons)

Key points

Worst Mag 7 performer: down 18% since August, up only 4% over a recent period, despite no core business deterioration.[[1]](https://seekingalpha.com/article/4891317-microsoft-cheap-for-all-the-wrong-reasons?mailingid=45243623&messageid=2800&position=rta_analysis_control_main_0_title&serial=45243623.9620)
Valuation reset makes it cheapest peer: 9.4x forward EV/Sales, 24x GAAP P/E.
AI monetization lags: Copilot reaches only 3.3% of Microsoft 365 seats, slower than expected.[[2]](https://seekingalpha.com/article/4891317-microsoft-cheap-for-all-the-wrong-reasons)
Competitive risk: OpenAI's expanding tie-up with Amazon threatens Microsoft's Azure AI position long-term.
Author sees it as "forgotten but not broken," drawing on Wall Street experience in TMT momentum investing.

Details and context

Microsoft has fallen out of favor amid broader Mag 7 rotation, but the author stresses no signs of fundamental decay like revenue misses or margin erosion. Slow Copilot uptake reflects enterprise caution on AI tools, not product flaws, while OpenAI's Amazon deal could dilute Azure's exclusivity over time.

The April 29 earnings will test if AI progress accelerates or if concerns deepen. Valuation multiples now sit well below historical peaks, offering a potential entry if momentum shifts.

Past cycles show TMT leaders like Microsoft rebound sharply from neglect phases, per the author's two decades tracking such patterns.

Key quotes

None sourced directly from full article.

Why it matters

Microsoft's slide highlights risks in AI hype cycles, where execution lags can punish even leaders. For investors, it signals a rare discount on a cash-rich giant with Azure and Office moats, but only if AI ramps up. Watch the April 29 earnings for Copilot metrics and Azure guidance, though competitive shifts remain unpredictable.[[1]](https://seekingalpha.com/article/4891317-microsoft-cheap-for-all-the-wrong-reasons?mailingid=45243623&messageid=2800&position=rta_analysis_control_main_0_title&serial=45243623.9620)