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 Gainers📈 & Losers📉

Our Biggest Gainers & Losers of the Day in the $100,000 Build Portfolio

For the 1st November 2024:

• Why This Sell-Off’s a Steal 💸

Why This Sell-Off’s a Steal 💸

They power your email, your cloud & probably your Nan’s computer but since they reported earnings they’ve been on a skid.

Even before that, Microsoft’s been pretty flat. The general consensus feels bearish but I think there’s still plenty of life in the tech vet yet. Everyone’s reading it all wrong so it’s a great time for me to add to my position for maximum gain.

Let me tell you why I think this sell off should be a shopping haul 🛍️ 

First of all we, need to look beyond the numbers. Recent earnings was a beat across the board so there’s something else that’s got investors worried. Actually, there’s a few things.

Myth #1: “Microsoft’s AI is All Hype” 🚀🤖

What you’ve heard - AI projects are risky – more than 80% of them tank. Plus, only 14% of companies are really ready to go all-in on AI. Scary stuff. 😨 

Reality Check - Microsoft’s a whale in the AI ocean. I’m not saying they’re too big to fail. I’m just saying the failure rate stats are probably are better fit for newer companies with shallower pockets. We’re also not talking about a small experimental project here – they’ve built Copilot right into Microsoft 365. Because of that, it doesn’t really matter if only 14% of companies are ready to go all-in on AI. It’s already integrated into the Microsoft suite we all know & love. It’s Word, Excel, & Outlook’s all-in-one AI buddy that’s ready to work. Microsoft has basically put AI on easy mode for businesses & you see that queue going out the door? That’s the companies are lining up for it💰️

And let’s talk tech. Microsoft isn’t running this on duct tape & dreams. They’re the first cloud player to use NVIDIA’s Blackwell GPUs (the gold standard for AI hardware). So while 80% of AI projects struggle, Microsoft’s got the brains and the brawn to make it work. As businesses realise this “add-on” actually makes their teams faster & more efficient the bigger the demand for Copilot will be.

Myth #2: “Growth Drivers? Microsoft’s Got None Left” ⛽📈

What you’ve heard - Microsoft’s growth party is over; it’s too big to keep booming.

Reality Check - Size doesn’t matter…. right? I hope not anyway. It shouldn’t if you’re leading a whole new market. Microsoft’s growth drivers, like Azure (cloud) & AI-powered tools, are doing anything but slowing down. Azure might be #2 in cloud after Amazon’s AWS, but it’s still the one posting double-digit growth every quarter. How much more growth do you want?!

And here’s the bit that makes my eyes turn to dollar signs. AI & cloud markets are still both in their growth phase. If we just look at the AI market, it’s penciled in to expand by almost 30% every year through to 2030. That means every quarter, Microsoft just keeps scooping up more market share. Especially from companies stuck in their ways that end up scrambling to adopt AI to stay competitive. Azure keeps growing at over 30% per quarter & Copilot is spreading across industries like wildfire. Anyone who says Microsoft’s got nothing left needs to put their money in a savings account & stay out the game.

Myth #3: “It’s Just Too Expensive” 💸🔍

What you’ve heard: Microsoft’s share price is too high; it’s overpriced.

Reality Check: There’s a difference between price & value. Not every high price is bad value. Investors get scared off by big numbers & I will agree looking at forward earnings Microsoft is trading at a slight premium, but guess what? Microsoft is a premium company.

If I was buying a Ferrari & it was the price of a Ford, it’d make me suspicious. I’d expect the engine to blow up by the time I got to the end of the road.

Microsoft is the Ferrari of the tech world. A slight premium doesn’t worry me.

We’re talking about a global tech leader with consistent profitability, billions invested in R&D, & a track record for making big, smart acquisitions (hello, LinkedIn & GitHub). And they’ve done a great job of turning these acquisitions into cash flow machines, & the AI investments just keep paying off. 📈 Holding a quality business in fast-growing sectors is worth the premium, especially if they’re consistently meeting (or beating) expectations.

The Game Plan 📋💡

Look, this portfolio is about long term, consistent growth. If you’re a long-term investor like me, I think you need your brain looking at if you don’t have at least a small part of your portfolio here.

1/ It’s a Cash Machine 🏦: They keep exceeding expectations on profitability – no sign of slowing down.

2/ Market Leader 💪: Microsoft’s one of the best at integrating AI into tools that people actually use.

3/ Access to the Best Tech 💻: Microsoft is first to the best hardware & has exclusive access to the AI tools that smaller competitors can’t touch.

And right now, it’s on sale! 🤯 

The sell off is the opportunity here. It currently makes up just shy of 8% of my portfolio but I’ll be using this pullback to bring down my average price. Happy to move up to 10% of the portfolio into this tech vet.

No stock is risk-free & Microsoft isn’t exempt from that. Cybersecurity risks, high expectations, & economic uncertainties can all put a downer on things. But overall, this is a solid choice with plenty of fuel left in the tank.

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That’s all! See you same time tomorrow 👋 

P.S Hit reply & let me know what you thought of today’s newsletter. All feedback is welcomed ❤️