Making Cents Sense

Market data and company results used in this article are current through August 6, 2026. I have a recurring problem with Microsoft stock: every time I decide it looks expensive, the company produces another quarter that makes “expensive” sound less like analysis and more like a personal failure of imagination. This is the emotional trap of owning—or considering owning—a truly exceptional business. A mediocre company can be dismissed with a spreadsheet and a functioning sense of self-preservation. Microsoft forces me to argue with myself. The valuation looks demanding, the artificial-intelligence spending looks enormous, and the expectations look high enough to require supplemental oxygen. Then Microsoft reports 18% revenue growth on a base of more than $280 billion, Azure grows 43%, operating income rises 18%, and I am left staring at the numbers like a man who arrived at a duel carrying a strongly worded memo. As of August 6, Microsoft shares trade around $487. The market values the c...

Every time Microsoft goes on another tear, I see the exact same debate play out like clockwork. One crowd is convinced they've missed the opportunity forever. They stare at the chart like someone who arrived at the airport just in time to watch their plane disappear into the clouds. "Well, that's it," they sigh. "I guess I'll wait for the next bear market." The other crowd suddenly discovers a level of confidence normally reserved for lottery winners and declares Microsoft will apparently compound at 25% annually until the sun burns out. Neither side seems particularly interested in living in reality. I've learned that one of the most expensive habits investors develop is believing that stocks have feelings. If a company goes up a lot, people assume it's somehow "too high." If it falls 40%, they automatically assume it's "cheap." The market, meanwhile, couldn't care less about your emotional attachment to round numbers...

Every few years, Wall Street finds a new obsession. First it was the internet. Then smartphones. Then cloud computing. Now it's artificial intelligence. The difference this time is that Microsoft somehow managed to have a front-row seat for every one of those revolutions. Just when investors begin wondering whether the company has become too large to grow, it quietly discovers another trillion-dollar opportunity. That's a remarkable habit, and one that deserves a closer look before deciding whether Microsoft still belongs in a long-term portfolio. Whenever I evaluate Microsoft, I try to ignore the daily headlines and focus on the bigger picture. The stock has become one of the market's favorite AI investments, which is both exciting and dangerous. Exciting because Microsoft isn't simply talking about artificial intelligence—it has embedded AI into nearly every major business it owns. Dangerous because expectations have become incredibly high. When investors expect perfe...