Microsoft Corporation (MSFT): A Bull Case Theory 

We came across a bullish thesis on Microsoft Corporation on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on MSFT. Microsoft Corporation’s share was trading at $486.74 as of December 1st. MSFT’s trailing and forward P/E were 34.99 and 31.45 respectively according to Yahoo Finance.

Microsoft’s Q1 FY26 results confirmed the “Great Re-Integration,” where enterprises are abandoning fragmented “best-of-breed” architectures and paying a premium for a single, integrated partner to control the risks of “jagged intelligence.” With bookings up 112% and a $392 billion backlog, Microsoft’s integrated AI stack has become the default enterprise platform. Its strategy is not to win purely on infrastructure or models but to dominate the “Cockpit”—the security, identity, and compliance layer that enterprises rely on to safely deploy AI.

This “Control Premium” has become Microsoft’s deepest moat, creating customer lock-in beyond performance or cost advantages. The company is funding this transformation with an extraordinary $35 billion quarterly CapEx—entirely self-financed through $45 billion in operating cash flow—positioning it as one of only a few firms able to sustain this scale. Despite heavy investment, Microsoft maintained 49% operating margins and guided stable profitability, signaling pricing power and unmatched efficiency.

Enterprises are committing long-term contracts to secure AI capacity, validating that risk management now outweighs modular flexibility. Competitors such as Google and AWS remain relevant through TPU economics and developer neutrality, yet Microsoft wins the boardroom by selling control. The parallel to its 1998 “Server & Tools” playbook is clear: the company again leads by simplifying complexity through integration.

AI’s unpredictability demands trusted orchestration, and Microsoft’s unified control stack provides it. The Q1 results prove integration is not a theory but a measurable customer decision, making Microsoft’s “Control Premium” the defining moat of the AI era and signaling a structural shift in enterprise computing.

Previously we covered a bullish thesis on Microsoft Corporation (MSFT) by Ray Myers in May 2025, which highlighted the company’s dominance in enterprise software, gaming, and cloud computing through Azure. The company’s stock price has appreciated approximately by 7.41% since our coverage. This is because the thesis has played out. Nikhs shares a similar view but emphasizes Microsoft’s “Control Premium” and integrated AI-driven enterprise strategy.

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Disclosure: None.