Microsoft has become an attractive investment opportunity due to the rise of OpenAI, a company valued at over $588 billion. Despite a recent sell-off, analysts still rate MSFT as a ‘Strong Buy’. The company’s Azure and cloud services saw a 39% year-over-year growth, but high capital expenditure demands are driven by the need for AI infrastructure.
Many believe that Microsoft is heavily reliant on OpenAI, which could lead to risk. However, this perspective oversimplifies the situation. MSFT benefits from various scenarios, not just success or failure. OpenAI’s diversification efforts may also unlock significant annual cash flow of over $30 billion and improve its free cash flow profile.
In reality, Microsoft is poised to benefit from a range of outcomes related to OpenAI, rather than being solely dependent on the company’s success. This shift in perspective makes MSFT an attractive investment opportunity for those looking to capitalize on the growth driven by Azure and cloud services.
Source: https://seekingalpha.com/article/4869947-microsoft-stock-openai-concentration-risk-made-msft-irresistible