Microsoft (MSFT): A Bull Case Theory

We came across a bullish thesis on Microsoft on Max Dividends’s Substack. As of 2ⁿᵈ July, Microsoft’s share was trading at $491.09. MSFT’s trailing and forward P/E were 38.01 and 32.85 respectively according to Yahoo Finance.

Microsoft (MSFT) is a dividend stock that stands out with a strong business model, reliable dividends, and massive growth potential. Microsoft, founded in 1975 by Bill Gates and Paul Allen, is a leader in cloud computing, artificial intelligence, and enterprise software. The company has a history of dividend growth, with 20 consecutive years of annual payout increases, and a 10-year dividend growth rate of 10.2%. Microsoft’s dividend policy complements its $60 billion share repurchase program, creating a powerful total return proposition.

Microsoft’s future growth prospects are driven by its leadership in cloud computing (Azure), artificial intelligence (AI), and enterprise software. The company’s $80 billion investment in AI infrastructure in FY2025 underscores its commitment to scaling high-margin AI services. Key growth drivers include AI monetization, cloud and hybrid work solutions, and strategic partnerships. Microsoft’s AAA credit rating and diversified cash flows provide resilience, making it an attractive long-term investment with a 12-month average price target of $513 (11.8% upside).

Microsoft’s key traits define true ‘forever stocks’: wide economic moats, consistent free cash flow generation, and management teams that balance reinvestment with shareholder returns. While their dividend yields may appear modest, their double-digit dividend growth rates and massive share buyback programs create powerful compounding potential. Microsoft’s strong financials, growth prospects, and commitment to returning capital to investors make it an ideal forever holding.

Previously, we covered a bullish thesis on Microsoft by Ray Myers, published on May 25, which highlighted the company’s critical role in AI infrastructure and energy needs. The stock has appreciated by 7.02% since our coverage. This is because the previous thesis on energy needs for AI played out. Max Dividends shares a similar view, emphasizing Microsoft’s leadership in cloud computing, AI, and enterprise software, with a history of dividend growth and massive growth potential. The conviction in the thesis has strengthened, with Microsoft’s $80 billion investment in AI infrastructure and a 12-month average price target of $513.

Microsoft is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 284 hedge fund portfolios held MSFT at the end of first quarter which was 317 in the previous quarter.

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Disclosure: None. This article was originally published at Insider Monkey.