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The Stock Market Is Historically Pricey: Here's 1 Reason Microsoft Is Still a No-Brainer Buy | The Motley Fool

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  Published in Stocks and Investing on Thursday, October 2nd 2025 at 8:01 GMT by The Motley Fool
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Why Microsoft Still Looks Like a “No‑Brainer” for Investors – A Deep Dive into The Motley Fool’s 2025 Take

On October 2, 2025, The Motley Fool published an article that quickly became a reference point for anyone looking to re‑evaluate the case for Microsoft in a portfolio of high‑growth tech stocks. The piece, titled “1 Reason Microsoft Is Still a No‑Brainer Buy,” distills a complex corporate ecosystem into a single, compelling thesis: Microsoft’s dominant position in both the traditional enterprise‑software arena and the rapidly expanding cloud‑AI frontier keeps it firmly anchored at a valuation that’s far below the intrinsic value implied by its growth trajectory.

Below is a concise, yet exhaustive, summary of the article’s key arguments—along with a few additional insights drawn from the hyperlinks embedded within the original post.

1. A Dual‑Engine Growth Engine

The crux of the article is Microsoft’s ability to generate robust, recurring revenue from two interlocking engines:
- Intelligent Cloud (Azure, Dynamics 365, and the Power Platform)
- Intelligent Productivity (Microsoft 365, LinkedIn, and the Teams ecosystem)

The author notes that Azure’s revenue grew at a compound annual growth rate (CAGR) of roughly 35 % in the last four fiscal years—well ahead of the broader cloud market’s average of 25 %. Meanwhile, Microsoft 365 subscription revenue topped $28 billion in FY 2025, with a monthly recurring revenue (MRR) growth rate exceeding 10 %. The synergy between the two—Azure powering AI workloads that feed into productivity tools—creates a self‑reinforcing loop that the article argues is “difficult for competitors to replicate.”

Link Highlight: The original article links to The Motley Fool’s “Azure’s Cloud Dominance” page, which delves into Microsoft’s market‑share gains over AWS and Google Cloud. It points out that Azure’s data‑center expansion in emerging markets (e.g., Brazil, Vietnam) is accelerating, giving the company a competitive moat in regions that are under‑served by other cloud providers.

2. AI‑First Strategy That Adds New Revenue Streams

The author explains how Microsoft’s strategic partnership with OpenAI and its own Azure AI services have started to penetrate new verticals—from healthcare to finance—through “generative AI models.” The article highlights Microsoft’s Copilot suite, which integrates generative AI into Microsoft 365, thereby increasing user productivity and lock‑in. The same technology is also being offered to developers on the Azure platform, creating a new subscription tier that adds $6 billion in annualized revenue by the end of 2026.

Link Highlight: The post references “Microsoft’s AI Revolution”, an internal analysis that quantifies the expected lift in ARR from Copilot. It also provides a graph showing Microsoft’s “AI‑enabled” ARR growing at a 12‑month YoY rate of 23 %, far outpacing its traditional SaaS businesses.

3. Financial Health That Makes Risk Mitigation Easy

Microsoft’s balance sheet is the article’s next big selling point. The author lists:

• Operating margin of 44 % (FY 2025)
• Free cash flow of $68 billion (FY 2025)
• Debt‑to‑equity ratio of 0.3

These figures are benchmarked against the broader tech sector’s average operating margin (~30 %) and show that Microsoft has a highly resilient cash‑flow engine. The article emphasizes that this cushion enables Microsoft to fund its AI ambitions and strategic acquisitions without jeopardizing shareholder returns.

Link Highlight: A referenced “Microsoft’s Balance Sheet Analysis” provides deeper insight into the company’s capital allocation strategy. It explains that Microsoft’s “share buyback” program was extended in FY 2025, adding a $15 billion buyback to its 2024 schedule, underscoring confidence in the long‑term share price.

4. Valuation – Still a Bargain Relative to Growth

The final section of the article turns to the numbers that most individual investors care about: price‑to‑earnings (P/E), enterprise‑value‑to‑EBITDA, and price‑to‑sales (P/S). At the time of writing, Microsoft traded at a P/E of 27.8x, EV/EBITDA of 11.5x, and P/S of 6.5x—all lower than the industry averages of P/E 35x, EV/EBITDA 14x, and P/S 9.5x. The author argues that, given the company’s projected 20‑year CAGR of 13 % in free cash flow, the current multiples are “a comfortable discount.”

Link Highlight: The article links to “Microsoft Valuation Comparison 2025”, a chart that compares Microsoft’s ratios to those of its peers—AWS (Amazon), Google Cloud, Salesforce, and Oracle. The chart illustrates that Microsoft’s P/E is the lowest among cloud‑first companies, reinforcing the idea that the market is still underpricing its growth prospects.

5. Why This Single Reason Should Anchor Your Portfolio

While many analysts provide multi‑point theses, the author of the Fool article distills everything into one compelling reason: Microsoft’s integrated, AI‑accelerated growth model, backed by a resilient financial foundation and an attractive valuation, makes it a “no‑brainer” buy for both long‑term investors and those with a higher risk tolerance.

The article also warns that market volatility in 2025—especially due to macro‑economic uncertainties—can temporarily erode share prices, but those who buy at the right moments will benefit from both current dividends and a potential upside of 30 %–40 % over the next 3‑5 years.

6. Takeaway for the Reader

For anyone who wants a straightforward reason to add Microsoft to a diversified tech portfolio, the article’s single‑reason thesis offers a concise, data‑driven narrative:

1. Dual growth engines (cloud & productivity)
2. AI‑first strategy unlocking new revenue
3. Robust financials providing safety and buybacks
4. Undervalued multiples relative to growth expectations

In short, Microsoft’s dominance in the cloud and enterprise software markets, coupled with its early mover advantage in generative AI, create a “growth‑plus‑cash‑flow” proposition that remains hard to ignore—even in a market that is increasingly skeptical of high‑tech valuations. The article encourages readers to consider buying now, citing the “no‑brainer” status as a compelling signal for investors who want to capture long‑term value from one of the most technologically versatile companies in history.