"Even After Reading All the B2B Markets, It's All in Vain"
These past few days, while on vacation, I've been doing something else entirely:
Researching core US tech blue-chip stocks.
Before, when I looked at AI stocks, I always felt they were lacking.
Where were they lacking? In comparison to the best companies on the US stock market.
Only by understanding the best companies currently available can one truly grasp the quality of AI stocks.
Furthermore, these leading tech blue-chips are almost all investing in AI + self-developed chips to bypass Nvidia.
In-depth research into AI also inevitably involves these blue-chips.
Today, I'll talk about Microsoft.
What is Microsoft? Many people still think of Microsoft as just Windows + Office.
In fact, Microsoft today = No. 1 (Enterprise software - OS 450 million paid users) + No. 1 globally (Gaming - Activision + Xbox) + No. 1 globally (Development No. 2 (Cloud services - Azure 22% market share) + Developer ecosystem - GitHub + VS) + No. 1 globally (Professional networking - LinkedIn 1 billion users)
This is almost a perfect company, a textbook example of a high-quality enterprise.
Exceptional ecosystem stickiness + complete moat + domineering pricing power + forward-looking investment strategy. Let me share a few observations:
1. Throughout history, Office has defeated countless free versions, defining the language of modern business. Its moat is so deep that even if competitors offer free versions with the same functionality, they will find it difficult to replace in the short to medium term.
2. Microsoft = the most certain winner in the "enterprise AI application layer." Google's consumer-facing (C-end) and Microsoft's business-facing (B-end) are virtually unbeatable.
3. Benefits more directly than Google (not relying on search) + higher profit margins than Amazon + more aggressive AI than Apple
4. The moat widens in the AI era due to OpenAI's early deployment; Copilot further deepens M365's moat in the AI era.
5. Early monetization of B2B AI: Copilot 20 million paid seats (YoY +250%); AI business $37 billion return (+123%).
6. Reaps three benefits in the AI era: the only company simultaneously benefiting from AI computing power (Azure) + AI applications (Copilot) + AI models (OpenAI investment), a triple benefit; this strategic layout is remarkable.
7. Financial reports are almost perfect, except for the large investment in capex, details omitted.
Good companies are like this; studying them inspires respect.
Therefore, it is said: Without understanding MSFT, one's understanding of B2B companies is in vain.
What is your image of Microsoft?
P.S. It's too late, so I'll stop here for now.
