Is MSFT a Value Play at ~25% off ATHs? Assessing the OpenAI IPO and the Profitability Gap
u/LRB_ ·
Reddit — r/ValueInvesting
· February 27, 2026 at 15:48
· ⬆ 30 pts
· 💬 34 comments
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Summary
The post analyzes Microsoft (MSFT) after a ~25% pullback from its all-time high, questioning if it represents a value opportunity.
The author's main concerns revolve around Microsoft's dependency on OpenAI, the potential impact of an OpenAI IPO, and the significant CapEx spending required to support its AI ambitions.
Quality assessment: This is well-reasoned speculation. The author raises valid strategic questions and uses real data points (stock price, Azure growth, CapEx projections) but does not perform a deep financial valuation.
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I’ve been watching MSFT lately as it trades around the $395–$405 range a significant pullback from its 52-week high of $555. For a company with a wide moat and 39% Azure growth, it’s starting to look like a value play, but I’m stuck on the OpenAI dependency.
I keep seeing reports that OpenAI still lacks a clear "path to profitability" despite their massive $110B funding round this month. With competition from Anthropic and Google intensifying, I’m trying to figure out where this leaves Microsoft if the "AI bubble" sentiment continues to sour.
Two specific questions for the sub:
The IPO Impact: If OpenAI goes public (rumored for late 2026), does MSFT lose its "exclusive" edge? They currently hold a 27% stake and a deal for 20% of OpenAI’s revenue through 2032. Does an IPO make OpenAI a competitor or just a massive liquid asset on Microsoft’s balance sheet?
Margin Compression: Microsoft’s CapEx is projected to hit $100B+ in FY2026. At what point does the market stop rewarding "AI potential" and start punishing the massive spend if the ROI (Copilot/Azure AI) doesn't scale as fast as the costs?
Is this a "generational buying opportunity" or is the market correctly pricing in a slowdown in enterprise AI adoption?