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Wayne Inc.
2022-09-08
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Microsoft: Why I Traded It In For Apple And Google
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Wall Street fell sharply on Friday following a solid jobs report for September that increased the likelihood the Federal Reserve will barrel ahead with an interest rate hiking campaign many investors fear will push the U.S. economy into a recession.</p><p>The Labor Department reported the unemployment rate fell to 3.5%, lower than expectations of 3.7%, in an economy that continues to show resilience despite the Fed's efforts to bring down high inflation by weakening growth.</p><p>Nonfarm payrolls rose by 263,000 jobs, more than the 250,000 figure economists polled by Reuters had forecast. Money markets raised to 92% the probability of a fourth straight 75 basis-point rate hike when Fed policymakers meet on Nov. 1-2, up from 83.4% before the data.</p><p>The job gains, lower unemployment rate and continued healthy wage growth point to a labor market Fed officials will likely still see as keeping inflation too high.</p><p>In the latest of a steady stream of hawkish messages by policymakers, New York Fed President John Williams said more rate hikes were needed to tackle inflation in a process that will likely increase the number of people without jobs.</p><p>The data cemented another jumbo-sized, 75 basis-point rate hike in November as "the labor market is still way too hot for the Fed's comfort zone," said Bill Sterling, global strategist at GW&K Investment Management.</p><p>"This was a classic case of good news is bad news," he said. "The market took the good news of the robust labor market report and turned it into an ever-more vigilant Fed and therefore potentially higher risks of a recession next year."</p><p>One economist said the Fed should not be reassured by the tight labor market because when the unemployment rate begins to rise, it does so quickly and is a leading indicator of a recession.</p><p>"We haven't felt the full effects of the tightening," said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. "They're going to keep going until eventually this thing turns over, and when it turns over you won't be able to slow the momentum."</p><p>Next week's consumer price index will provide a key snapshot of where inflation stands.</p><p>Despite Friday's nosedive, a hefty two-day rally earlier in the week pushed the S&P 500, the Dow and the Nasdaq to post their first week of gains after three straight weeks of losses.</p><p>The Dow Jones Industrial Average closed down 630.15 points, or 2.11%, at 29,296.79, the S&P 500 lost 104.86 points, or 2.80%, to 3,639.66 and the Nasdaq Composite dropped 420.91 points, or 3.8%, to 10,652.41.</p><p>Volume on U.S. exchanges was 11.15 billion shares, compared with the 11.73 billion average for the full session over the past 20 trading days.</p><p>For the week, the S&P 500 rose 1.51%,the Dow added 1.99% and the Nasdaq gained 0.73%.</p><p>All 11 major S&P 500 sectors declined, with technology falling the most, down 4.14%.</p><p>The Philadelphia SE Semiconductor index fell 6.06% after a revenue warning from Advanced Micro Devices signaled a chip slump could be worse than expected. The index posted its biggest single-day percentage decline in more than three weeks.</p><p>AMD shares fell 13.9% as the company's third-quarter revenue estimates were about $1 billion lower than previously forecast. It was the largest declining stock on the Nasdaq 100.</p><p>FedEx Corp slid 0.5% after an internal memo seen by Reuters showed the division that handles most e-commerce deliveries expects to lower volume forecasts as its customers plan to ship fewer holiday packages.</p><p>Declining issues outnumbered advancing ones on the NYSE by a 5.78-to-1 ratio; on Nasdaq, a 4.56-to-1 ratio favored decliners.</p><p>The S&P 500 posted two new 52-week highs and 71 new lows; the Nasdaq Composite recorded 27 new highs and 337 new lows.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>US STOCKS-Wall Street Ends Sharply Lower As Jobs Report Cements Rate Hike Regime</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nUS STOCKS-Wall Street Ends Sharply Lower As Jobs Report Cements Rate Hike Regime\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1036604489\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/443ce19704621c837795676028cec868);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Reuters </p>\n<p class=\"h-time\">2022-10-08 07:04</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><ul><li>U.S. unemployment rate falls to 3.5%</li><li>Technology leads sector declines on S&P 500</li><li>AMD leads chipmakers lower after revenue warning</li><li>FedEx drops on report of plans to reduce volume forecasts</li><li>Indexes fall: Dow down 2.1%, S&P 500 2.8%, Nasdaq 3.8%</li></ul><p>Oct 7 (Reuters) - Wall Street fell sharply on Friday following a solid jobs report for September that increased the likelihood the Federal Reserve will barrel ahead with an interest rate hiking campaign many investors fear will push the U.S. economy into a recession.</p><p>The Labor Department reported the unemployment rate fell to 3.5%, lower than expectations of 3.7%, in an economy that continues to show resilience despite the Fed's efforts to bring down high inflation by weakening growth.</p><p>Nonfarm payrolls rose by 263,000 jobs, more than the 250,000 figure economists polled by Reuters had forecast. Money markets raised to 92% the probability of a fourth straight 75 basis-point rate hike when Fed policymakers meet on Nov. 1-2, up from 83.4% before the data.</p><p>The job gains, lower unemployment rate and continued healthy wage growth point to a labor market Fed officials will likely still see as keeping inflation too high.</p><p>In the latest of a steady stream of hawkish messages by policymakers, New York Fed President John Williams said more rate hikes were needed to tackle inflation in a process that will likely increase the number of people without jobs.</p><p>The data cemented another jumbo-sized, 75 basis-point rate hike in November as "the labor market is still way too hot for the Fed's comfort zone," said Bill Sterling, global strategist at GW&K Investment Management.</p><p>"This was a classic case of good news is bad news," he said. "The market took the good news of the robust labor market report and turned it into an ever-more vigilant Fed and therefore potentially higher risks of a recession next year."</p><p>One economist said the Fed should not be reassured by the tight labor market because when the unemployment rate begins to rise, it does so quickly and is a leading indicator of a recession.</p><p>"We haven't felt the full effects of the tightening," said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. "They're going to keep going until eventually this thing turns over, and when it turns over you won't be able to slow the momentum."</p><p>Next week's consumer price index will provide a key snapshot of where inflation stands.</p><p>Despite Friday's nosedive, a hefty two-day rally earlier in the week pushed the S&P 500, the Dow and the Nasdaq to post their first week of gains after three straight weeks of losses.</p><p>The Dow Jones Industrial Average closed down 630.15 points, or 2.11%, at 29,296.79, the S&P 500 lost 104.86 points, or 2.80%, to 3,639.66 and the Nasdaq Composite dropped 420.91 points, or 3.8%, to 10,652.41.</p><p>Volume on U.S. exchanges was 11.15 billion shares, compared with the 11.73 billion average for the full session over the past 20 trading days.</p><p>For the week, the S&P 500 rose 1.51%,the Dow added 1.99% and the Nasdaq gained 0.73%.</p><p>All 11 major S&P 500 sectors declined, with technology falling the most, down 4.14%.</p><p>The Philadelphia SE Semiconductor index fell 6.06% after a revenue warning from Advanced Micro Devices signaled a chip slump could be worse than expected. The index posted its biggest single-day percentage decline in more than three weeks.</p><p>AMD shares fell 13.9% as the company's third-quarter revenue estimates were about $1 billion lower than previously forecast. It was the largest declining stock on the Nasdaq 100.</p><p>FedEx Corp slid 0.5% after an internal memo seen by Reuters showed the division that handles most e-commerce deliveries expects to lower volume forecasts as its customers plan to ship fewer holiday packages.</p><p>Declining issues outnumbered advancing ones on the NYSE by a 5.78-to-1 ratio; on Nasdaq, a 4.56-to-1 ratio favored decliners.</p><p>The S&P 500 posted two new 52-week highs and 71 new lows; the Nasdaq Composite recorded 27 new highs and 337 new lows.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index",".DJI":"éçŒæŻ"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2273391757","content_text":"U.S. unemployment rate falls to 3.5%Technology leads sector declines on S&P 500AMD leads chipmakers lower after revenue warningFedEx drops on report of plans to reduce volume forecastsIndexes fall: Dow down 2.1%, S&P 500 2.8%, Nasdaq 3.8%Oct 7 (Reuters) - Wall Street fell sharply on Friday following a solid jobs report for September that increased the likelihood the Federal Reserve will barrel ahead with an interest rate hiking campaign many investors fear will push the U.S. economy into a recession.The Labor Department reported the unemployment rate fell to 3.5%, lower than expectations of 3.7%, in an economy that continues to show resilience despite the Fed's efforts to bring down high inflation by weakening growth.Nonfarm payrolls rose by 263,000 jobs, more than the 250,000 figure economists polled by Reuters had forecast. Money markets raised to 92% the probability of a fourth straight 75 basis-point rate hike when Fed policymakers meet on Nov. 1-2, up from 83.4% before the data.The job gains, lower unemployment rate and continued healthy wage growth point to a labor market Fed officials will likely still see as keeping inflation too high.In the latest of a steady stream of hawkish messages by policymakers, New York Fed President John Williams said more rate hikes were needed to tackle inflation in a process that will likely increase the number of people without jobs.The data cemented another jumbo-sized, 75 basis-point rate hike in November as \"the labor market is still way too hot for the Fed's comfort zone,\" said Bill Sterling, global strategist at GW&K Investment Management.\"This was a classic case of good news is bad news,\" he said. \"The market took the good news of the robust labor market report and turned it into an ever-more vigilant Fed and therefore potentially higher risks of a recession next year.\"One economist said the Fed should not be reassured by the tight labor market because when the unemployment rate begins to rise, it does so quickly and is a leading indicator of a recession.\"We haven't felt the full effects of the tightening,\" said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. \"They're going to keep going until eventually this thing turns over, and when it turns over you won't be able to slow the momentum.\"Next week's consumer price index will provide a key snapshot of where inflation stands.Despite Friday's nosedive, a hefty two-day rally earlier in the week pushed the S&P 500, the Dow and the Nasdaq to post their first week of gains after three straight weeks of losses.The Dow Jones Industrial Average closed down 630.15 points, or 2.11%, at 29,296.79, the S&P 500 lost 104.86 points, or 2.80%, to 3,639.66 and the Nasdaq Composite dropped 420.91 points, or 3.8%, to 10,652.41.Volume on U.S. exchanges was 11.15 billion shares, compared with the 11.73 billion average for the full session over the past 20 trading days.For the week, the S&P 500 rose 1.51%,the Dow added 1.99% and the Nasdaq gained 0.73%.All 11 major S&P 500 sectors declined, with technology falling the most, down 4.14%.The Philadelphia SE Semiconductor index fell 6.06% after a revenue warning from Advanced Micro Devices signaled a chip slump could be worse than expected. The index posted its biggest single-day percentage decline in more than three weeks.AMD shares fell 13.9% as the company's third-quarter revenue estimates were about $1 billion lower than previously forecast. It was the largest declining stock on the Nasdaq 100.FedEx Corp slid 0.5% after an internal memo seen by Reuters showed the division that handles most e-commerce deliveries expects to lower volume forecasts as its customers plan to ship fewer holiday packages.Declining issues outnumbered advancing ones on the NYSE by a 5.78-to-1 ratio; on Nasdaq, a 4.56-to-1 ratio favored decliners.The S&P 500 posted two new 52-week highs and 71 new lows; the Nasdaq Composite recorded 27 new highs and 337 new lows.","news_type":1,"symbols_score_info":{".IXIC":0.73,".SPX":0.6,".DJI":0.9}},"isVote":1,"tweetType":1,"viewCount":2416,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9938254526,"gmtCreate":1662619757565,"gmtModify":1676537102807,"author":{"id":"4101048123236740","authorId":"4101048123236740","name":"Wayne Inc.","avatar":"https://static.itradeup.com/news/ae9bd2971b59eede456de4cb9a041492","crmLevel":11,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"4101048123236740","idStr":"4101048123236740"},"themes":[],"htmlText":"đđ»","listText":"đđ»","text":"đđ»","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9938254526","repostId":"2265005862","repostType":2,"repost":{"id":"2265005862","kind":"news","pubTimestamp":1662606707,"share":"https://ttm.financial/m/news/2265005862?lang=en_US&edition=fundamental","pubTime":"2022-09-08 11:11","market":"us","language":"en","title":"Microsoft: Why I Traded It In For Apple And Google","url":"https://stock-news.laohu8.com/highlight/detail?id=2265005862","media":"Seeking Alpha","summary":"SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>I sold my Microsoft stock last year at around $320.</li><li>Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.</li><li>Microsoft still has better growth than Apple, but its whole story depends on one segment (the cloud).</li><li>Microsoft's non-cloud segments aren't growing very fast.</li><li>Because they have multiple growing segments instead of one, I consider Apple and Google better than Microsoft.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/29fb06be709bd703cbad09d8693a3db6\" tg-width=\"1080\" tg-height=\"791\" width=\"100%\" height=\"auto\"/><span>Dimitrios Kambouris/Getty Images Entertainment</span></p><p><b>Microsoft</b> (NASDAQ:MSFT) is a stock that I held through the 2020/2021 NASDAQ rally and managed to sell before it came crashing down. I bought it after reading about the company's success with Azure-the second fastest growing of the big tech cloud services. <b>Alphabet's</b> (GOOG) Google Cloud was growing faster than Microsoft's Azure at the time (54% vs. 42%), but Azure was profitable while Google Cloud wasn't. So I figured that MSFT was the safer cloud bet.</p><p>When I bought MSFT, I was pretty much betting on Azure. When researching the stock, I discovered that its revenue growth in non-cloud businesses was slow, and that its valuation was expensive. Today, Microsoft only trades at 26.5 times earnings, but it was above 30 around the time I sold it. It has a sky-high 11.4 price-to-book ratio to this day.</p><p>Around the end of 2021 I knew that the Federal Reserve was planning on hiking interest rates, so I sold the two most expensive stocks in my portfolio: MSFT and <b>Adobe</b> (ADBE). The timing on those sales was pretty good because I booked gains on both (33% on MSFT and 20% on ADBE), while limiting my exposure to the tech bear market. Shortly after these sales, I wrote the article "The Tech Stock Crash Will Likely Get Worse," which explained my reasons for being bearish on tech stocks. After the article published, the NASDAQ-100 fell a further 28%.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a19f7b4044c0b5ef16645e84b3bfd206\" tg-width=\"1280\" tg-height=\"923\" width=\"100%\" height=\"auto\"/><span>NASDAQ trading after I predicted a tech crash (Google Finance)</span></p><p>Initially, I invested the proceeds I got from selling Microsoft into classic value plays: banks and energy stocks. I figured that rising interest rates would help banks earn more money while the economic recovery from COVID-19 would boost energy stocks. I was only half right about the first part (rising interest rates helped retail banks but not investment banks), I was 100% correct about the second part. At any rate, I booked some small profits on energy stocks and didn't buy anything new for a while after that.</p><p>Later, though, I started thinking about getting into tech stocks again. After watching the NASDAQ-100 tumble, I noticed that valuations were getting cheap. In particular, I noticed that Google had gone all the way down to 20 times earnings, despite still having double digit revenue growth, while Apple was gaining market share in China. Apple was on the pricey side at that point, but not as much as Microsoft (it traded at around 24 times earnings). So, I added some GOOGL and AAPL-the former stock has fallen about as much as Microsoft, the latter has given me a gain.</p><p>None of this is to say that I'm actively bearish on Microsoft. I still hold the <b>Invesco QQQ Trust</b> (QQQ), which has a high level of MSFT exposure. However, factoring in price, competitive dynamics, and growth, I find Google and Apple to be better bets. In the ensuing paragraphs, I'll explain why I think that way.</p><p><b>Competitive Landscape</b></p><p>One area where Google and Apple both have an edge over Microsoft is competitive dynamics. Google and Apple both have wide moats, Microsoft's position relative to competitors is less robust.</p><p>First, we can look at Google's moat. It's the #1 online ad platform in the world, with 26.4% of the market. In second place after Google is <b>Meta Platforms</b> (META), which has gained at Google's expense over the last decade, but is experiencing issues this year due to Apple's privacy changes and competition from TikTok. We can expect Google's moat to persist, because it benefitted from the very same Apple policy changes that hurt Meta, proving it has a resilient model competitors can't touch.</p><p>Next, we can look at Apple's moat. This stems from its brand (the most valuable in the world), which helps it retain customers, and its interconnected ecosystem, which encourages customers to buy multiple products. Apple has a huge fan community on YouTube, which helps it sell products without extra ad spend. As a result, Apple is #1 or #2 across multiple product categories, including:</p><ul><li><p>Smartphones- #2 after <b>Samsung</b> (OTCPK:SSNLF).</p></li><li><p>Smartphone operating systems- #1 by revenue, #2 byuser count.</p></li><li><p>Tablets- #1.</p></li><li><p>Smart watches- #1.</p></li><li><p>Computer operating systems - #2 after Windows.</p></li></ul><p>So we can see that Google and Apple both have high market share. Additionally, they have factors that can lead us to infer continued high market share-brand loyalty in Apple's case, a resilient ad platform in Google's case.</p><p>As for Microsoft?</p><p>It has some of the advantages that Apple and Google have, but not to the same extent. It controls Windows, the most popular computer operating system, but that product category has plateaued. It no longer has a meaningful presence in smartphones, as it failed in that market. In cloud services, it is #2 after Amazon. Finally, in gaming, it's second in hardware sales to <b>Sony's</b> (SONY) PlayStation 5, and owns the popular Minecraft IP. Microsoft has a pretty good competitive position, but it is not the #1 player in any growth sectors the way Apple and Google are.</p><p><b>Comparative Valuation</b></p><p>Having looked at Microsoft's competitive position, we can now turn to its valuation. MSFT remains a pretty expensive stock well into the 2022 bear market, and it may continue to be expensive for a while. To illustrate this fact, we can compare Microsoft's earnings multiples with those of Apple and Google.</p><p><img src=\"https://static.tigerbbs.com/67e868df6fdac980f7adad3c07e00ed8\" tg-width=\"938\" tg-height=\"328\" width=\"100%\" height=\"auto\"/></p><p>As you can see, Apple is pretty similar to Microsoft, while Google is far cheaper. Valuation favors Google, it does not favor Apple, but recall the previous section on the competitive landscape: Apple's high brand loyalty makes it a very reliable company. It is not under any threat of margin compression due to new competitors entering the market, Microsoft arguably is.</p><p>As for Microsoft's valuation in a discounted cash flow model: it's hard to forecast the cash flows of a company with as many moving pieces as MSFT. However, if we start with the last 12 months' $8.69 in free cash flow per share, and assume that it grows at the 10-year CAGR rate of 7.7%, we get to $12.59 in FCF per share after five years. Using a 3.25% discount rate (the current treasury yield), and assuming that growth falls to zero after five years, we get a present value of $379. That's a significant amount of upside, but remember that DCF models are very sensitive to inputs. Change the discount rate to 8% and suddenly the fair value falls to $150, which is severe downside. If you run this same model swapping out Microsoft's free cash flow for Google's, you get a fair value of $215, which implies 2X upside. Google also ends up worth less than today's price if you raise the discount rate to 8%, but the amount of downside (about 20%) is less.</p><p><b>Microsoft's Earnings</b></p><p>As I showed above, Microsoft has a steeper valuation than other tech companies you can compare it to. However, it has some advantages that other tech companies don't have. For example, it's still growing. In its most recent quarter, MSFT managed to achieve positive top and bottom line growth, posting the following results:</p><ul><li><p>Revenue: $51.9 billion, up 12%.</p></li><li><p>Operating income: $20.5 billion, up 14%.</p></li><li><p>Net income: $16.7 billion, up 2%.</p></li><li><p>Diluted EPS: $2.23, up 3%.</p></li></ul><p>Like many companies in the same period, Microsoft achieved solid revenue growth in Q2; however, unlike those other companies, it also had positive earnings growth. For a tech company to still be growing in 2022 after the Fed's many rate hikes and Apple's privacy changes is impressive. However, note that:</p><ul><li><p>Google's Q2 top line growth was higher than Microsoft's, at 13%.</p></li><li><p>Apple is doing a major product launch today that could boost its sales.</p></li></ul><p>Certainly, Microsoft is a good company. But when you look at Google's wider moat and Apple's potential catalyst, both of these stocks look like better opportunities.</p><p><b>Risks and Challenges</b></p><p>As I've shown in this article, Microsoft is a good stock, but perhaps not the best in the tech sector. I personally think Apple and Google are more appealing. However, there are risks and challenges facing any investor who chooses to overweight Google and Apple at the expense of Microsoft, including:</p><ul><li><p><b>Concentration risk.</b> All investors are exposed to two types of risk: market risk and specific risk. Market risk is the risk inherent in the whole market, specific risk is the risk in any one stock. The more you diversify, the less your specific risk. A broadly diversified portfolio with thousands of stocks reduces your specific risk to near zero. When you increase your specific risk by holding a lower number of stocks, your total portfolio is said to have 'concentration risk.' If you're considering investing in just tech stocks, a full 'FAANG' portfolio that includes MSFT, AAPL, GOOGL and the rest of the NASDAQ-100 will have less concentration risk than a pure Apple/Google portfolio. It would still be exposed to market risk, but its overall risk would be lower than holding just Apple and Google.</p></li><li><p><b>A slowdown in consumer spending.</b> Despite the current economic contraction, consumer spending is still rising modestly. In this environment, there are plenty of people buying Apple products, and patronizing companies that advertise on Google. If we enter a full fledged recession, though, that will likely change. As economic activity dips, people start to worry about being laid off-they often cut their spending as a result. Should something like that happen, an enterprise-focused company like MSFT might fare better than Google and Apple, which are heavily invested in the consumer.</p></li></ul><p>The risks above are worth keeping in mind. If they concern you, then Invesco's QQQ ETF might suit you better than a concentrated Apple/Google bet. Nevertheless, it's hard not to notice that Google and Apple enjoy competitive advantages over Microsoft. That reason alone is enough for me to weight the former two stocks higher than the latter.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Microsoft: Why I Traded It In For Apple And Google</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMicrosoft: Why I Traded It In For Apple And Google\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-09-08 11:11 GMT+8 <a href=https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.Microsoft still has...</p>\n\n<a href=\"https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GOOG":"è°·æ","AAPL":"èčæ","MSFT":"ćŸźèœŻ","GOOGL":"è°·æA"},"source_url":"https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2265005862","content_text":"SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.Microsoft still has better growth than Apple, but its whole story depends on one segment (the cloud).Microsoft's non-cloud segments aren't growing very fast.Because they have multiple growing segments instead of one, I consider Apple and Google better than Microsoft.Dimitrios Kambouris/Getty Images EntertainmentMicrosoft (NASDAQ:MSFT) is a stock that I held through the 2020/2021 NASDAQ rally and managed to sell before it came crashing down. I bought it after reading about the company's success with Azure-the second fastest growing of the big tech cloud services. Alphabet's (GOOG) Google Cloud was growing faster than Microsoft's Azure at the time (54% vs. 42%), but Azure was profitable while Google Cloud wasn't. So I figured that MSFT was the safer cloud bet.When I bought MSFT, I was pretty much betting on Azure. When researching the stock, I discovered that its revenue growth in non-cloud businesses was slow, and that its valuation was expensive. Today, Microsoft only trades at 26.5 times earnings, but it was above 30 around the time I sold it. It has a sky-high 11.4 price-to-book ratio to this day.Around the end of 2021 I knew that the Federal Reserve was planning on hiking interest rates, so I sold the two most expensive stocks in my portfolio: MSFT and Adobe (ADBE). The timing on those sales was pretty good because I booked gains on both (33% on MSFT and 20% on ADBE), while limiting my exposure to the tech bear market. Shortly after these sales, I wrote the article \"The Tech Stock Crash Will Likely Get Worse,\" which explained my reasons for being bearish on tech stocks. After the article published, the NASDAQ-100 fell a further 28%.NASDAQ trading after I predicted a tech crash (Google Finance)Initially, I invested the proceeds I got from selling Microsoft into classic value plays: banks and energy stocks. I figured that rising interest rates would help banks earn more money while the economic recovery from COVID-19 would boost energy stocks. I was only half right about the first part (rising interest rates helped retail banks but not investment banks), I was 100% correct about the second part. At any rate, I booked some small profits on energy stocks and didn't buy anything new for a while after that.Later, though, I started thinking about getting into tech stocks again. After watching the NASDAQ-100 tumble, I noticed that valuations were getting cheap. In particular, I noticed that Google had gone all the way down to 20 times earnings, despite still having double digit revenue growth, while Apple was gaining market share in China. Apple was on the pricey side at that point, but not as much as Microsoft (it traded at around 24 times earnings). So, I added some GOOGL and AAPL-the former stock has fallen about as much as Microsoft, the latter has given me a gain.None of this is to say that I'm actively bearish on Microsoft. I still hold the Invesco QQQ Trust (QQQ), which has a high level of MSFT exposure. However, factoring in price, competitive dynamics, and growth, I find Google and Apple to be better bets. In the ensuing paragraphs, I'll explain why I think that way.Competitive LandscapeOne area where Google and Apple both have an edge over Microsoft is competitive dynamics. Google and Apple both have wide moats, Microsoft's position relative to competitors is less robust.First, we can look at Google's moat. It's the #1 online ad platform in the world, with 26.4% of the market. In second place after Google is Meta Platforms (META), which has gained at Google's expense over the last decade, but is experiencing issues this year due to Apple's privacy changes and competition from TikTok. We can expect Google's moat to persist, because it benefitted from the very same Apple policy changes that hurt Meta, proving it has a resilient model competitors can't touch.Next, we can look at Apple's moat. This stems from its brand (the most valuable in the world), which helps it retain customers, and its interconnected ecosystem, which encourages customers to buy multiple products. Apple has a huge fan community on YouTube, which helps it sell products without extra ad spend. As a result, Apple is #1 or #2 across multiple product categories, including:Smartphones- #2 after Samsung (OTCPK:SSNLF).Smartphone operating systems- #1 by revenue, #2 byuser count.Tablets- #1.Smart watches- #1.Computer operating systems - #2 after Windows.So we can see that Google and Apple both have high market share. Additionally, they have factors that can lead us to infer continued high market share-brand loyalty in Apple's case, a resilient ad platform in Google's case.As for Microsoft?It has some of the advantages that Apple and Google have, but not to the same extent. It controls Windows, the most popular computer operating system, but that product category has plateaued. It no longer has a meaningful presence in smartphones, as it failed in that market. In cloud services, it is #2 after Amazon. Finally, in gaming, it's second in hardware sales to Sony's (SONY) PlayStation 5, and owns the popular Minecraft IP. Microsoft has a pretty good competitive position, but it is not the #1 player in any growth sectors the way Apple and Google are.Comparative ValuationHaving looked at Microsoft's competitive position, we can now turn to its valuation. MSFT remains a pretty expensive stock well into the 2022 bear market, and it may continue to be expensive for a while. To illustrate this fact, we can compare Microsoft's earnings multiples with those of Apple and Google.As you can see, Apple is pretty similar to Microsoft, while Google is far cheaper. Valuation favors Google, it does not favor Apple, but recall the previous section on the competitive landscape: Apple's high brand loyalty makes it a very reliable company. It is not under any threat of margin compression due to new competitors entering the market, Microsoft arguably is.As for Microsoft's valuation in a discounted cash flow model: it's hard to forecast the cash flows of a company with as many moving pieces as MSFT. However, if we start with the last 12 months' $8.69 in free cash flow per share, and assume that it grows at the 10-year CAGR rate of 7.7%, we get to $12.59 in FCF per share after five years. Using a 3.25% discount rate (the current treasury yield), and assuming that growth falls to zero after five years, we get a present value of $379. That's a significant amount of upside, but remember that DCF models are very sensitive to inputs. Change the discount rate to 8% and suddenly the fair value falls to $150, which is severe downside. If you run this same model swapping out Microsoft's free cash flow for Google's, you get a fair value of $215, which implies 2X upside. Google also ends up worth less than today's price if you raise the discount rate to 8%, but the amount of downside (about 20%) is less.Microsoft's EarningsAs I showed above, Microsoft has a steeper valuation than other tech companies you can compare it to. However, it has some advantages that other tech companies don't have. For example, it's still growing. In its most recent quarter, MSFT managed to achieve positive top and bottom line growth, posting the following results:Revenue: $51.9 billion, up 12%.Operating income: $20.5 billion, up 14%.Net income: $16.7 billion, up 2%.Diluted EPS: $2.23, up 3%.Like many companies in the same period, Microsoft achieved solid revenue growth in Q2; however, unlike those other companies, it also had positive earnings growth. For a tech company to still be growing in 2022 after the Fed's many rate hikes and Apple's privacy changes is impressive. However, note that:Google's Q2 top line growth was higher than Microsoft's, at 13%.Apple is doing a major product launch today that could boost its sales.Certainly, Microsoft is a good company. But when you look at Google's wider moat and Apple's potential catalyst, both of these stocks look like better opportunities.Risks and ChallengesAs I've shown in this article, Microsoft is a good stock, but perhaps not the best in the tech sector. I personally think Apple and Google are more appealing. However, there are risks and challenges facing any investor who chooses to overweight Google and Apple at the expense of Microsoft, including:Concentration risk. All investors are exposed to two types of risk: market risk and specific risk. Market risk is the risk inherent in the whole market, specific risk is the risk in any one stock. The more you diversify, the less your specific risk. A broadly diversified portfolio with thousands of stocks reduces your specific risk to near zero. When you increase your specific risk by holding a lower number of stocks, your total portfolio is said to have 'concentration risk.' If you're considering investing in just tech stocks, a full 'FAANG' portfolio that includes MSFT, AAPL, GOOGL and the rest of the NASDAQ-100 will have less concentration risk than a pure Apple/Google portfolio. It would still be exposed to market risk, but its overall risk would be lower than holding just Apple and Google.A slowdown in consumer spending. Despite the current economic contraction, consumer spending is still rising modestly. In this environment, there are plenty of people buying Apple products, and patronizing companies that advertise on Google. If we enter a full fledged recession, though, that will likely change. As economic activity dips, people start to worry about being laid off-they often cut their spending as a result. Should something like that happen, an enterprise-focused company like MSFT might fare better than Google and Apple, which are heavily invested in the consumer.The risks above are worth keeping in mind. If they concern you, then Invesco's QQQ ETF might suit you better than a concentrated Apple/Google bet. Nevertheless, it's hard not to notice that Google and Apple enjoy competitive advantages over Microsoft. That reason alone is enough for me to weight the former two stocks higher than the latter.","news_type":1,"symbols_score_info":{"GOOGL":0.9,"MSFT":1,"AAPL":1,"GOOG":0.9}},"isVote":1,"tweetType":1,"viewCount":2973,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9938254526,"gmtCreate":1662619757565,"gmtModify":1676537102807,"author":{"id":"4101048123236740","authorId":"4101048123236740","name":"Wayne Inc.","avatar":"https://static.itradeup.com/news/ae9bd2971b59eede456de4cb9a041492","crmLevel":11,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"4101048123236740","idStr":"4101048123236740"},"themes":[],"htmlText":"đđ»","listText":"đđ»","text":"đđ»","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9938254526","repostId":"2265005862","repostType":2,"repost":{"id":"2265005862","kind":"news","pubTimestamp":1662606707,"share":"https://ttm.financial/m/news/2265005862?lang=en_US&edition=fundamental","pubTime":"2022-09-08 11:11","market":"us","language":"en","title":"Microsoft: Why I Traded It In For Apple And Google","url":"https://stock-news.laohu8.com/highlight/detail?id=2265005862","media":"Seeking Alpha","summary":"SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>I sold my Microsoft stock last year at around $320.</li><li>Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.</li><li>Microsoft still has better growth than Apple, but its whole story depends on one segment (the cloud).</li><li>Microsoft's non-cloud segments aren't growing very fast.</li><li>Because they have multiple growing segments instead of one, I consider Apple and Google better than Microsoft.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/29fb06be709bd703cbad09d8693a3db6\" tg-width=\"1080\" tg-height=\"791\" width=\"100%\" height=\"auto\"/><span>Dimitrios Kambouris/Getty Images Entertainment</span></p><p><b>Microsoft</b> (NASDAQ:MSFT) is a stock that I held through the 2020/2021 NASDAQ rally and managed to sell before it came crashing down. I bought it after reading about the company's success with Azure-the second fastest growing of the big tech cloud services. <b>Alphabet's</b> (GOOG) Google Cloud was growing faster than Microsoft's Azure at the time (54% vs. 42%), but Azure was profitable while Google Cloud wasn't. So I figured that MSFT was the safer cloud bet.</p><p>When I bought MSFT, I was pretty much betting on Azure. When researching the stock, I discovered that its revenue growth in non-cloud businesses was slow, and that its valuation was expensive. Today, Microsoft only trades at 26.5 times earnings, but it was above 30 around the time I sold it. It has a sky-high 11.4 price-to-book ratio to this day.</p><p>Around the end of 2021 I knew that the Federal Reserve was planning on hiking interest rates, so I sold the two most expensive stocks in my portfolio: MSFT and <b>Adobe</b> (ADBE). The timing on those sales was pretty good because I booked gains on both (33% on MSFT and 20% on ADBE), while limiting my exposure to the tech bear market. Shortly after these sales, I wrote the article "The Tech Stock Crash Will Likely Get Worse," which explained my reasons for being bearish on tech stocks. After the article published, the NASDAQ-100 fell a further 28%.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a19f7b4044c0b5ef16645e84b3bfd206\" tg-width=\"1280\" tg-height=\"923\" width=\"100%\" height=\"auto\"/><span>NASDAQ trading after I predicted a tech crash (Google Finance)</span></p><p>Initially, I invested the proceeds I got from selling Microsoft into classic value plays: banks and energy stocks. I figured that rising interest rates would help banks earn more money while the economic recovery from COVID-19 would boost energy stocks. I was only half right about the first part (rising interest rates helped retail banks but not investment banks), I was 100% correct about the second part. At any rate, I booked some small profits on energy stocks and didn't buy anything new for a while after that.</p><p>Later, though, I started thinking about getting into tech stocks again. After watching the NASDAQ-100 tumble, I noticed that valuations were getting cheap. In particular, I noticed that Google had gone all the way down to 20 times earnings, despite still having double digit revenue growth, while Apple was gaining market share in China. Apple was on the pricey side at that point, but not as much as Microsoft (it traded at around 24 times earnings). So, I added some GOOGL and AAPL-the former stock has fallen about as much as Microsoft, the latter has given me a gain.</p><p>None of this is to say that I'm actively bearish on Microsoft. I still hold the <b>Invesco QQQ Trust</b> (QQQ), which has a high level of MSFT exposure. However, factoring in price, competitive dynamics, and growth, I find Google and Apple to be better bets. In the ensuing paragraphs, I'll explain why I think that way.</p><p><b>Competitive Landscape</b></p><p>One area where Google and Apple both have an edge over Microsoft is competitive dynamics. Google and Apple both have wide moats, Microsoft's position relative to competitors is less robust.</p><p>First, we can look at Google's moat. It's the #1 online ad platform in the world, with 26.4% of the market. In second place after Google is <b>Meta Platforms</b> (META), which has gained at Google's expense over the last decade, but is experiencing issues this year due to Apple's privacy changes and competition from TikTok. We can expect Google's moat to persist, because it benefitted from the very same Apple policy changes that hurt Meta, proving it has a resilient model competitors can't touch.</p><p>Next, we can look at Apple's moat. This stems from its brand (the most valuable in the world), which helps it retain customers, and its interconnected ecosystem, which encourages customers to buy multiple products. Apple has a huge fan community on YouTube, which helps it sell products without extra ad spend. As a result, Apple is #1 or #2 across multiple product categories, including:</p><ul><li><p>Smartphones- #2 after <b>Samsung</b> (OTCPK:SSNLF).</p></li><li><p>Smartphone operating systems- #1 by revenue, #2 byuser count.</p></li><li><p>Tablets- #1.</p></li><li><p>Smart watches- #1.</p></li><li><p>Computer operating systems - #2 after Windows.</p></li></ul><p>So we can see that Google and Apple both have high market share. Additionally, they have factors that can lead us to infer continued high market share-brand loyalty in Apple's case, a resilient ad platform in Google's case.</p><p>As for Microsoft?</p><p>It has some of the advantages that Apple and Google have, but not to the same extent. It controls Windows, the most popular computer operating system, but that product category has plateaued. It no longer has a meaningful presence in smartphones, as it failed in that market. In cloud services, it is #2 after Amazon. Finally, in gaming, it's second in hardware sales to <b>Sony's</b> (SONY) PlayStation 5, and owns the popular Minecraft IP. Microsoft has a pretty good competitive position, but it is not the #1 player in any growth sectors the way Apple and Google are.</p><p><b>Comparative Valuation</b></p><p>Having looked at Microsoft's competitive position, we can now turn to its valuation. MSFT remains a pretty expensive stock well into the 2022 bear market, and it may continue to be expensive for a while. To illustrate this fact, we can compare Microsoft's earnings multiples with those of Apple and Google.</p><p><img src=\"https://static.tigerbbs.com/67e868df6fdac980f7adad3c07e00ed8\" tg-width=\"938\" tg-height=\"328\" width=\"100%\" height=\"auto\"/></p><p>As you can see, Apple is pretty similar to Microsoft, while Google is far cheaper. Valuation favors Google, it does not favor Apple, but recall the previous section on the competitive landscape: Apple's high brand loyalty makes it a very reliable company. It is not under any threat of margin compression due to new competitors entering the market, Microsoft arguably is.</p><p>As for Microsoft's valuation in a discounted cash flow model: it's hard to forecast the cash flows of a company with as many moving pieces as MSFT. However, if we start with the last 12 months' $8.69 in free cash flow per share, and assume that it grows at the 10-year CAGR rate of 7.7%, we get to $12.59 in FCF per share after five years. Using a 3.25% discount rate (the current treasury yield), and assuming that growth falls to zero after five years, we get a present value of $379. That's a significant amount of upside, but remember that DCF models are very sensitive to inputs. Change the discount rate to 8% and suddenly the fair value falls to $150, which is severe downside. If you run this same model swapping out Microsoft's free cash flow for Google's, you get a fair value of $215, which implies 2X upside. Google also ends up worth less than today's price if you raise the discount rate to 8%, but the amount of downside (about 20%) is less.</p><p><b>Microsoft's Earnings</b></p><p>As I showed above, Microsoft has a steeper valuation than other tech companies you can compare it to. However, it has some advantages that other tech companies don't have. For example, it's still growing. In its most recent quarter, MSFT managed to achieve positive top and bottom line growth, posting the following results:</p><ul><li><p>Revenue: $51.9 billion, up 12%.</p></li><li><p>Operating income: $20.5 billion, up 14%.</p></li><li><p>Net income: $16.7 billion, up 2%.</p></li><li><p>Diluted EPS: $2.23, up 3%.</p></li></ul><p>Like many companies in the same period, Microsoft achieved solid revenue growth in Q2; however, unlike those other companies, it also had positive earnings growth. For a tech company to still be growing in 2022 after the Fed's many rate hikes and Apple's privacy changes is impressive. However, note that:</p><ul><li><p>Google's Q2 top line growth was higher than Microsoft's, at 13%.</p></li><li><p>Apple is doing a major product launch today that could boost its sales.</p></li></ul><p>Certainly, Microsoft is a good company. But when you look at Google's wider moat and Apple's potential catalyst, both of these stocks look like better opportunities.</p><p><b>Risks and Challenges</b></p><p>As I've shown in this article, Microsoft is a good stock, but perhaps not the best in the tech sector. I personally think Apple and Google are more appealing. However, there are risks and challenges facing any investor who chooses to overweight Google and Apple at the expense of Microsoft, including:</p><ul><li><p><b>Concentration risk.</b> All investors are exposed to two types of risk: market risk and specific risk. Market risk is the risk inherent in the whole market, specific risk is the risk in any one stock. The more you diversify, the less your specific risk. A broadly diversified portfolio with thousands of stocks reduces your specific risk to near zero. When you increase your specific risk by holding a lower number of stocks, your total portfolio is said to have 'concentration risk.' If you're considering investing in just tech stocks, a full 'FAANG' portfolio that includes MSFT, AAPL, GOOGL and the rest of the NASDAQ-100 will have less concentration risk than a pure Apple/Google portfolio. It would still be exposed to market risk, but its overall risk would be lower than holding just Apple and Google.</p></li><li><p><b>A slowdown in consumer spending.</b> Despite the current economic contraction, consumer spending is still rising modestly. In this environment, there are plenty of people buying Apple products, and patronizing companies that advertise on Google. If we enter a full fledged recession, though, that will likely change. As economic activity dips, people start to worry about being laid off-they often cut their spending as a result. Should something like that happen, an enterprise-focused company like MSFT might fare better than Google and Apple, which are heavily invested in the consumer.</p></li></ul><p>The risks above are worth keeping in mind. If they concern you, then Invesco's QQQ ETF might suit you better than a concentrated Apple/Google bet. Nevertheless, it's hard not to notice that Google and Apple enjoy competitive advantages over Microsoft. That reason alone is enough for me to weight the former two stocks higher than the latter.</p></body></html>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Microsoft: Why I Traded It In For Apple And Google</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nMicrosoft: Why I Traded It In For Apple And Google\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-09-08 11:11 GMT+8 <a href=https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.Microsoft still has...</p>\n\n<a href=\"https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"GOOG":"è°·æ","AAPL":"èčæ","MSFT":"ćŸźèœŻ","GOOGL":"è°·æA"},"source_url":"https://seekingalpha.com/article/4539353-microsoft-stock-why-i-traded-for-apple-and-google","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2265005862","content_text":"SummaryI sold my Microsoft stock last year at around $320.Initially, I re-invested the money in bank stocks, but when the NASDAQ crashed, I started putting it into Apple and Google.Microsoft still has better growth than Apple, but its whole story depends on one segment (the cloud).Microsoft's non-cloud segments aren't growing very fast.Because they have multiple growing segments instead of one, I consider Apple and Google better than Microsoft.Dimitrios Kambouris/Getty Images EntertainmentMicrosoft (NASDAQ:MSFT) is a stock that I held through the 2020/2021 NASDAQ rally and managed to sell before it came crashing down. I bought it after reading about the company's success with Azure-the second fastest growing of the big tech cloud services. Alphabet's (GOOG) Google Cloud was growing faster than Microsoft's Azure at the time (54% vs. 42%), but Azure was profitable while Google Cloud wasn't. So I figured that MSFT was the safer cloud bet.When I bought MSFT, I was pretty much betting on Azure. When researching the stock, I discovered that its revenue growth in non-cloud businesses was slow, and that its valuation was expensive. Today, Microsoft only trades at 26.5 times earnings, but it was above 30 around the time I sold it. It has a sky-high 11.4 price-to-book ratio to this day.Around the end of 2021 I knew that the Federal Reserve was planning on hiking interest rates, so I sold the two most expensive stocks in my portfolio: MSFT and Adobe (ADBE). The timing on those sales was pretty good because I booked gains on both (33% on MSFT and 20% on ADBE), while limiting my exposure to the tech bear market. Shortly after these sales, I wrote the article \"The Tech Stock Crash Will Likely Get Worse,\" which explained my reasons for being bearish on tech stocks. After the article published, the NASDAQ-100 fell a further 28%.NASDAQ trading after I predicted a tech crash (Google Finance)Initially, I invested the proceeds I got from selling Microsoft into classic value plays: banks and energy stocks. I figured that rising interest rates would help banks earn more money while the economic recovery from COVID-19 would boost energy stocks. I was only half right about the first part (rising interest rates helped retail banks but not investment banks), I was 100% correct about the second part. At any rate, I booked some small profits on energy stocks and didn't buy anything new for a while after that.Later, though, I started thinking about getting into tech stocks again. After watching the NASDAQ-100 tumble, I noticed that valuations were getting cheap. In particular, I noticed that Google had gone all the way down to 20 times earnings, despite still having double digit revenue growth, while Apple was gaining market share in China. Apple was on the pricey side at that point, but not as much as Microsoft (it traded at around 24 times earnings). So, I added some GOOGL and AAPL-the former stock has fallen about as much as Microsoft, the latter has given me a gain.None of this is to say that I'm actively bearish on Microsoft. I still hold the Invesco QQQ Trust (QQQ), which has a high level of MSFT exposure. However, factoring in price, competitive dynamics, and growth, I find Google and Apple to be better bets. In the ensuing paragraphs, I'll explain why I think that way.Competitive LandscapeOne area where Google and Apple both have an edge over Microsoft is competitive dynamics. Google and Apple both have wide moats, Microsoft's position relative to competitors is less robust.First, we can look at Google's moat. It's the #1 online ad platform in the world, with 26.4% of the market. In second place after Google is Meta Platforms (META), which has gained at Google's expense over the last decade, but is experiencing issues this year due to Apple's privacy changes and competition from TikTok. We can expect Google's moat to persist, because it benefitted from the very same Apple policy changes that hurt Meta, proving it has a resilient model competitors can't touch.Next, we can look at Apple's moat. This stems from its brand (the most valuable in the world), which helps it retain customers, and its interconnected ecosystem, which encourages customers to buy multiple products. Apple has a huge fan community on YouTube, which helps it sell products without extra ad spend. As a result, Apple is #1 or #2 across multiple product categories, including:Smartphones- #2 after Samsung (OTCPK:SSNLF).Smartphone operating systems- #1 by revenue, #2 byuser count.Tablets- #1.Smart watches- #1.Computer operating systems - #2 after Windows.So we can see that Google and Apple both have high market share. Additionally, they have factors that can lead us to infer continued high market share-brand loyalty in Apple's case, a resilient ad platform in Google's case.As for Microsoft?It has some of the advantages that Apple and Google have, but not to the same extent. It controls Windows, the most popular computer operating system, but that product category has plateaued. It no longer has a meaningful presence in smartphones, as it failed in that market. In cloud services, it is #2 after Amazon. Finally, in gaming, it's second in hardware sales to Sony's (SONY) PlayStation 5, and owns the popular Minecraft IP. Microsoft has a pretty good competitive position, but it is not the #1 player in any growth sectors the way Apple and Google are.Comparative ValuationHaving looked at Microsoft's competitive position, we can now turn to its valuation. MSFT remains a pretty expensive stock well into the 2022 bear market, and it may continue to be expensive for a while. To illustrate this fact, we can compare Microsoft's earnings multiples with those of Apple and Google.As you can see, Apple is pretty similar to Microsoft, while Google is far cheaper. Valuation favors Google, it does not favor Apple, but recall the previous section on the competitive landscape: Apple's high brand loyalty makes it a very reliable company. It is not under any threat of margin compression due to new competitors entering the market, Microsoft arguably is.As for Microsoft's valuation in a discounted cash flow model: it's hard to forecast the cash flows of a company with as many moving pieces as MSFT. However, if we start with the last 12 months' $8.69 in free cash flow per share, and assume that it grows at the 10-year CAGR rate of 7.7%, we get to $12.59 in FCF per share after five years. Using a 3.25% discount rate (the current treasury yield), and assuming that growth falls to zero after five years, we get a present value of $379. That's a significant amount of upside, but remember that DCF models are very sensitive to inputs. Change the discount rate to 8% and suddenly the fair value falls to $150, which is severe downside. If you run this same model swapping out Microsoft's free cash flow for Google's, you get a fair value of $215, which implies 2X upside. Google also ends up worth less than today's price if you raise the discount rate to 8%, but the amount of downside (about 20%) is less.Microsoft's EarningsAs I showed above, Microsoft has a steeper valuation than other tech companies you can compare it to. However, it has some advantages that other tech companies don't have. For example, it's still growing. In its most recent quarter, MSFT managed to achieve positive top and bottom line growth, posting the following results:Revenue: $51.9 billion, up 12%.Operating income: $20.5 billion, up 14%.Net income: $16.7 billion, up 2%.Diluted EPS: $2.23, up 3%.Like many companies in the same period, Microsoft achieved solid revenue growth in Q2; however, unlike those other companies, it also had positive earnings growth. For a tech company to still be growing in 2022 after the Fed's many rate hikes and Apple's privacy changes is impressive. However, note that:Google's Q2 top line growth was higher than Microsoft's, at 13%.Apple is doing a major product launch today that could boost its sales.Certainly, Microsoft is a good company. But when you look at Google's wider moat and Apple's potential catalyst, both of these stocks look like better opportunities.Risks and ChallengesAs I've shown in this article, Microsoft is a good stock, but perhaps not the best in the tech sector. I personally think Apple and Google are more appealing. However, there are risks and challenges facing any investor who chooses to overweight Google and Apple at the expense of Microsoft, including:Concentration risk. All investors are exposed to two types of risk: market risk and specific risk. Market risk is the risk inherent in the whole market, specific risk is the risk in any one stock. The more you diversify, the less your specific risk. A broadly diversified portfolio with thousands of stocks reduces your specific risk to near zero. When you increase your specific risk by holding a lower number of stocks, your total portfolio is said to have 'concentration risk.' If you're considering investing in just tech stocks, a full 'FAANG' portfolio that includes MSFT, AAPL, GOOGL and the rest of the NASDAQ-100 will have less concentration risk than a pure Apple/Google portfolio. It would still be exposed to market risk, but its overall risk would be lower than holding just Apple and Google.A slowdown in consumer spending. Despite the current economic contraction, consumer spending is still rising modestly. In this environment, there are plenty of people buying Apple products, and patronizing companies that advertise on Google. If we enter a full fledged recession, though, that will likely change. As economic activity dips, people start to worry about being laid off-they often cut their spending as a result. Should something like that happen, an enterprise-focused company like MSFT might fare better than Google and Apple, which are heavily invested in the consumer.The risks above are worth keeping in mind. If they concern you, then Invesco's QQQ ETF might suit you better than a concentrated Apple/Google bet. Nevertheless, it's hard not to notice that Google and Apple enjoy competitive advantages over Microsoft. That reason alone is enough for me to weight the former two stocks higher than the latter.","news_type":1,"symbols_score_info":{"GOOGL":0.9,"MSFT":1,"AAPL":1,"GOOG":0.9}},"isVote":1,"tweetType":1,"viewCount":2973,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9914789633,"gmtCreate":1665366830522,"gmtModify":1676537592890,"author":{"id":"4101048123236740","authorId":"4101048123236740","name":"Wayne Inc.","avatar":"https://static.itradeup.com/news/ae9bd2971b59eede456de4cb9a041492","crmLevel":11,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"4101048123236740","idStr":"4101048123236740"},"themes":[],"htmlText":"đđ»","listText":"đđ»","text":"đđ»","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9914789633","repostId":"2273391757","repostType":4,"isVote":1,"tweetType":1,"viewCount":2416,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
