Branch² Intelligence
Multiple Compression Is a Real Threat to Microsoft Stock, But Its Core Story Isn’t Broken
Key takeaway
Multiple compression threat to Microsoft as AI capex cycle peaks and revenue growth decelerates.
- Step 1Microsoft's Azure growth deceleration and elevated AI capex raise concerns about return on invested capital.
- Step 2Investors reassess Microsoft's terminal growth rate, leading to multiple compression as the equity risk premium rises.
- Step 3Higher cost of capital for Microsoft may lead to reduced cloud investment or price increases for enterprise customers, including US SMEs.
Source: Yahoo Finance
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