3 6 Ke·2025-07-30 03:32Core Viewpoint - The article emphasizes that Microsoft is transforming AI into a new economic infrastructure, positioning itself as a leader in the AI space through its integration of AI across various business segments, yet the market has not fully recognized its valuation potential [1][2]. Group 1: Microsoft's AI Integration - Microsoft is the only tech giant turning AI into an "industrial engine" by focusing on infrastructure (Azure Cloud), software (Copilot), and orchestration tools (Copilot Studio) [1][2]. - AI is deeply embedded in Microsoft's operations, corporate culture, and business pipeline, leading to tangible returns [1][2]. - The market still perceives Microsoft as a traditional tech company, overlooking its role as the "heart" of the new AI infrastructure [2]. Group 2: Financial Performance and Metrics - Microsoft is expected to achieve an operating profit margin of 44.8% by 2026, the highest among its competitors, with a cash conversion cycle of 28 days, the most efficient in 20 years [2][5]. - Azure Cloud revenue grew by 34% year-over-year, with 18 percentage points of that growth directly attributed to AI workloads [2][8]. - The company has consistently exceeded expectations for 11 consecutive quarters, indicating strong financial performance [2][8]. Group 3: Revenue Composition and Business Segments - Microsoft's revenue is composed of three main segments: Intelligent Cloud (approximately 45% of total revenue), Productivity & Business Processes (over 30%), and More Personal Computing (about 25%) [4]. - The Intelligent Cloud segment, particularly Azure, is rapidly becoming a systemic competitor to Amazon AWS due to its integration with OpenAI models [4]. - The Productivity & Business Processes segment is where Copilot is generating significant revenue, with users now paying for AI services rather than just testing them [4][9]. Group 4: Market Perception and Valuation - Despite strong financial metrics, Microsoft's forward P/E ratio is below 30, and its PEG ratio is less than 1.7, suggesting it is undervalued compared to its growth potential [1][2][11]. - Analysts predict a Q4 FY2025 EPS of $2.93, a 8.9% increase year-over-year, with total revenue expected to reach $64.3 billion, a 14.4% increase [8]. - The market has not fully recognized Microsoft's long-term cash flow potential, as much of its capital expenditure has already been allocated, particularly to NVIDIA [6][13]. Group 5: Competitive Advantages - Microsoft has a unique competitive advantage with 75% of its revenue coming from high-margin, recurring service and subscription models [5]. - The company is positioned to scale AI without compressing margins, which could be a significant advantage in the market [9][13]. - Microsoft's deep vertical integration across infrastructure, applications, and operations sets it apart from competitors, making it a leader in AI commercialization [11][13].