Buying SaaS junk instead of Microsoft is indefensible
u/Low_Selection2815 ·
Reddit — r/ValueInvesting
· February 23, 2026 at 22:56
· ⬆ 132 pts
· 💬 94 comments
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AI Summary
Summary
The post argues that Microsoft (MSFT) is a superior investment compared to other, less-established SaaS companies, which the author refers to as "SaaS junk."
The author's thesis is that Microsoft represents a rare combination of value, growth, a strong moat, high margins, and capital efficiency, making it an undervalued and defensible long-term holding, especially given its position in the AI landscape.
Quality assessment: This is a high-level bullish pitch based on publicly available metrics and a strong qualitative argument. It is not deep-dive due diligence (DD) but rather a well-articulated opinion piece.
Score132
Comments94
Upvote %85%
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Revenue grew 16.7% YoY. EBITDA margin at 57%. This company destroys the rule of 40.
*All* of its margins are good. Its ROIC is 29%. The company continues to grow at an impressive pace. Low debt.
You would assume a company like this is trading at \~40 PE. It's profitable, growing, and has really solid margins. But its PE is currently 24. I'm hardly even a quantitative investor but these numbers are impossible to ignore.
If you are bearish because of AI, know that Microsoft is more insulated against AI than most of the SaaS junk this sub adores. Its revenue is diversified (Azure and other stuff) and its customers are sticky. Microsoft is also entitled to 20% of OpenAI's **revenue**, should it take off.
Microsoft is going no where. It will be relevant for the years to come. It will benefit from AI capex spend and will survive if it slows down (especially compared to other Mag7/tech).
Value, growth, moat, margins, capital efficiency, and survivability all intersect at Microsoft.