Meet Kevin on $MSFT (Oct 28, 2026)

And of course we have Microsoft, which performed better but faced rejection at the 562 level, which is the line we were specifically targeting for Microsoft.

We were saying we'd head to 565, my dear. This is what we have included in our daily summary and our Alpha reports. This is the line. The stock actually reached 565 with pinpoint accuracy, just above that line.

And now, as you know, it seems to be negatively affected by Google's situation.

If we compare this to Microsoft, we can understand more about why Microsoft is not suffering as much as Google. That's why I wanted to bring these two companies together.

Let's move on to Microsoft now. Microsoft is in a completely different position than Google. At Microsoft, the largest part of its business, namely agents and infrastructure, grew on an annual basis.

You can clearly see the growth here. Even the smallest part of their work has shrunk. The smallest part of their business is hardware and consumer products such as Xbox and phones.

So, at Microsoft, the larger part of the business grew and the smaller part shrunk.

I think this is why Microsoft is up 2.6% and Google is down 9% now. I own Microsoft shares. I bought when it was low. Ah, you know, we bought in at the dip. Okay, I sold a put option.

In fact, I covered a sell option, and bought some on the dip. A lot of things happened today. I don't need to repeat everything now, but the point is that I'm optimistic about the overall expansion of artificial intelligence.

I don't think what we're seeing here is a sign of a disaster in artificial intelligence. I think what we're seeing here is a sign that Google is already being disrupted by the very same burgeoning AI software.

Let's continue talking about Microsoft for a moment. Just to see what insights we have. Microsoft has a rather strange cash flow statement. You should handle this with caution.

Now, I want to be clear. I own Microsoft, but I want to be very clear. Microsoft is doing some shady things here.

Technically speaking, if you look here, we have a free cash flow of $19 billion. Good. Cash from operations: 58. Plants, property and equipment: 39 billion. But one of the things Microsoft does that is a bit strange is making these other investments.

What could other investments worth $13 billion be? Oh, I don't know . What about investments in Neoclouds, like the other $5.3 billion here?

which is apparently different from our investment in factories, property, and equipment . not really. Both fall under the investment category. But you should be aware of that. This is a simple manipulation, because if you exclude these investments and those other investments, our cash flow drops from $19 billion in free cash flow to zero.

So, there's a bit of manipulation here . It should be monitored carefully.

Well, regarding the initial compensation, these are the invoices they have. Bills totaling $95 billion. I have $64 billion in short-term cash plus $62 billion in accounts receivable .

I'm not really worried about the balance sheet of either of these companies. The balance sheets are good. They have raised enough money. The balance sheets are sound. They are still making a lot of money.

Their operating income grew by 20.9%, indicating that they have pricing power given that their total revenue increased by only 18.8%. But I want to warn you about this matter. I also think it's nonsense.

Why do I think it's nonsense? Because they reclassified some of their leases from 15 years to 25 years. This will extend the depreciation schedules. This means they deduct less depreciation each quarter .

The level of depreciation is still growing, but not as much as it would otherwise have.

As you can see, the depreciation has grown from $8 billion to $11.7 billion . I think if they hadn't made this change, we could have seen an additional two or three billion dollars deducted, and that would have directly impacted these numbers here.

If two or three billion dollars had been deducted from operating income, it would tell you that their pricing power was probably stable at best . Therefore, I think it is wrong to say that it is definitely on the rise.

There is definitely a need for some precision here.

This is Microsoft. We have remaining performance commitments at roughly the same levels as Google. Microsoft is valued at $677 billion.

It also includes OpenAI, Microsoft, Amazon Web Services, and all those players.