Microsoft Corporation (MSFT): A Bull Case Theory

We came across a bullish thesis on Microsoft Corporation on Monopolistic Investor’s Substack by Antoni Nabzdyk. In this article, we will summarize the bulls’ thesis on MSFT. Microsoft Corporation’s share was trading at $517.10 as of August 18^th. MSFT’s trailing and forward P/E were 37.91 and 33.44 respectively according to Yahoo Finance.

Microsoft Corporation (MSFT) is a highly diversified technology company with strong positions in software, hardware, and cloud computing. Its core software offerings include Office, Microsoft 365, SQL Server, and LinkedIn, while hardware products such as Surface laptops and Xbox consoles complement its ecosystem.

The Intelligent Cloud segment, which powers AI and enterprise solutions, has become a major growth driver. Microsoft benefits from high gross margins of nearly 69%, allowing significant reinvestment in R&D, marketing, and debt management. Its R&D spending has grown around 10% annually, reinforcing innovation and future growth, while free cash flow remains robust and stable due to the recurring nature of its B2B business model. The company exhibits monopolistic traits including network effects, scalability, and strong barriers to entry, with Office and Azure ecosystems widely adopted across businesses, creating stickiness and competitive moats.

A proprietary Monopolistic Traits Score rates MSFT at 6.2/10, reflecting strengths in gross margin, FCF margin, R&D, and ROIC, with the main weakness being revenue growth relative to peers. Financially, Microsoft maintains a “fortress balance sheet” with a AAA credit rating, $619 billion in assets, and $275 billion in liabilities, supporting stability and resilience. Its market share in key segments is significant but lags behind some competitors like Amazon and Apple.

Valuation analysis indicates the stock is currently overvalued, with DCF and AI-based fair value estimates ranging from $183 to $337, below the market price near $520. Overall, Microsoft represents a stable, innovative, and high-quality business with exceptional cash generation and competitive moats, but investors may prefer to wait for a price correction before initiating new positions.

Previously we covered a bullish thesis on Microsoft Corporation (MSFT) by Ray Myers in May 2025, which highlighted the company’s leadership in software, cloud, and gaming, along with strong growth from AI integration. The stock has appreciated around 14% since coverage as growth remained robust. Antoni Nabzdyk shares a similar view but emphasizes Microsoft’s monopolistic traits, stable free cash flow, and valuation insights.

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Disclosure: None.