MSFT

Market-Cap Weighted S&P 500 Breaks Out; Have We Already Seen the Bottom?

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Image: The market-cap weighted S&P 500 (SPY) has broken through its downtrend. The markets could be headed meaningfully higher. Image Source: TradingView By Brian Nelson CFA Excess savings in consumer bank accounts from the pandemic stimulus and government intervention that was issued during the worst of the COVID-19 pandemic will start to deplete almost entirely by the middle of this year. Talk of the debt ceiling on the U.S.’s national debt of $31.5 trillion is emerging, and interest on the debt will start to crowd out other spending with respect to the national budget. The markets, however, are forward looking, and many of these concerns are largely “baked in.” Within the discounted cash-flow model, for example, we take into consideration … Read more

Microsoft Is Betting Big on Artificial Intelligence (AI); Fiscal Q2 Shows Meager Revenue Growth, Weaker Cash Flow Generation

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  Image: Microsoft believes artificial intelligence (AI) will be the next platform wave, and the company is going full steam ahead to incorporate AI across its business systems. Image Source: Microsoft “The age of AI is upon us and Microsoft is powering it. We are witnessing non-linear improvements in capability of foundation models, which we are making available as platforms. And as customers select their cloud providers and invest in new workloads, we are well positioned to capture that opportunity as a leader in AI. We have the most powerful AI supercomputing infrastructure in the cloud. It’s being used by customers and partners like OpenAI to train state-of-the-art models and services, including ChatGPT.” – Microsoft CEO Satya Nadella (January 24, … Read more

Consumers Feeling the Pinch; S&P 500 Bounces Off Technical Resistance; Elasticities Breaking Down for Staples Stocks

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By Brian Nelson, CFA Microsoft Corp. (MSFT) is the latest big tech company to announce big job cuts. The company that is still working to close its deal with Activision (ATVI) announced that it would slash 10,000 jobs, or about 4.5% of its workforce. The unemployment rate in the U.S. stands at just 3.5%, as recorded in December 2022, so even though we’re witnessing quite a number of layoffs in Silicon Valley, the labor markets are still very, very healthy. Those being laid off are finding jobs rather quickly, too. According to the WSJ, “about 79% of workers recently hired after a tech-company layoff or termination landed their new job within three months of starting their search.” Businesses have been … Read more

Don’t Let “Them” Spin the Narrative

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By Brian Nelson, CFA Let’s call it how it is: 2022 was an absolute nightmare for the 60/40 stock/bond portfolio. During the year, the 60/40 stock/bond portfolio was down 16.9%, according to data from the Vanguard Balanced Index Fund Shares (VBIAX). During 2022, the S&P 500 (SPY) index was down 18.2%, meaning that the 60/40 stock/bond portfolio, despite allocating to 40% bonds, captured over 90% of the downside risk. Modern portfolio theory is dead: Stocks have done far better than bonds during upswings, and only slightly worse during downturns. The risk/reward for the 60/40 stock/bond portfolio just doesn’t add up anymore. Bond prices did not move inversely to stock prices during the COVID-19 meltdown, and they did not move inversely … Read more

We’re Glad Microsoft Sees Promise in ChatGPT

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Image Source: Mike Mozart By Brian Nelson, CFA Not having to worry about an upstart taking ChatGPT to the finish line is a big relief for the newsletter portfolios. Having already invested $1 billion in ChatGPT’s owner OpenAI in 2019, Microsoft Corp. (MSFT) may invest as much as $10 billion more in the artificial intelligence (AI) chatbot. Reports indicate that Microsoft would own a 49% stake in OpenAI, while getting a 75% share of OpenAI’s earnings. The greater control over ChatGPT, of which we brought to readers attention in our December 5 note, “Maintaining Our Fair Value Estimates Across Ad-Driven Social Media Equities In Light of Long Term AI-Driven Chatbot Threats,” will likely augment Microsoft’s search technology and its web … Read more

These Things Sometimes Take Time

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Image: The QQQ, which tracks the Nasdaq-100 Index, including Apple, Alphabet, and Microsoft has been a tremendous generator of wealth. Image Source: TradingView By Brian Nelson, CFA After the huge collapse in the markets in 2020, and the huge rebound in 2021, followed by a large retracement in 2022, we think things are going to be boring in 2023. They are likely going to be so boring that many investors will lose interest at the exact time that they should be most interested–when markets are well off their highs and uncertainty is near its peak.  Dollar Cost Averaging Dollar cost averaging is among the most powerful drivers behind long-term returns. Measuring returns from prior peak to prior peak is often … Read more

Adobe Acrobat Pro Prices Up 33%; Price Tag of Figma Deal Remains Overhang on Shares

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Image: Adobe’s long-term market opportunity is huge. Image Source: Adobe By Brian Nelson, CFA All things considered, fiscal 2022 was a solid year for Adobe (ADBE), as reported in its latest quarterly earnings report December 15. The company generated record revenue, operating income, and operating cash flow, and we loved that management is talking in terms of the “next decade of growth,” not next quarter or even next year. We like executive suites that are positioning their companies for the long run, and we think Chairman and CEO Shantanu Narayen has done a great job leading the charge. Adobe is among the most well-known software companies due in part to its Adobe Acrobat software. Almost anyone that has applied for a job has … Read more

Our Reports on Stocks in the Technology Giants Industry

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Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free. Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The … Read more

Exclusive Call: What To Expect From Valuentum in 2023

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Video: 2022 was a successful year by almost every measure from the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to the simulated High Yield Dividend Newsletter portfolio and Exclusive publication and beyond. There were some disappointments in 2022, of course, but the year showed the value of a Valuentum membership. Join President of Investment Research Brian Nelson on this year’s Exclusive conference call to learn what to expect from Valuentum in 2023. Cheers! Transcript President of Investment Research Brian Nelson: Happy Holidays everyone! I hope that you are enjoying this special time of year with family and friends, and I wish you all a wonderful 2023! I just wanted to take a few minutes to recap … Read more

Salesforce Doesn’t Make the Cut for the Newsletter Portfolios

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Image: How we rank our favorite ideas. We’re huge fans of ideas in the simulated newsletter portfolios and Exclusive publication. We like the ideas in the simulated newsletter portfolios and Exclusive publication the best. By Brian Nelson, CFA Salesforce, Inc. (CRM) has never been an idea in the simulated newsletter portfolios since inception, and that’s not going to change anytime soon. Its share price has been roughly cut in half in 2022, and we’re sticking with our $130-$196 per share fair value estimate range following the company’s disappointing outlook for the fourth quarter of fiscal 2023. Weakness across the software space and the exit of co-CEO Bret Taylor and Stewart Butterfield, the head of Salesforce-owned Slack, aren’t reassuring. Risks are … Read more