Startup Archive
Jensen Huang explains why companies will be much larger in the age of AI

“I was told a long time ago that NVIDIA would never be larger than a billion dollars,” Jensen begins.

This forecast was obviously wrong. NVIDIA’s market cap today is almost $3 trillion.

Jensen argues that the markets for technology companies are going to be much larger in the future because the market for “intelligent work” is enormous:

“This is the extraordinary thing about technology right now… We’re in the manufacturing of intelligence. We’re in the manufacturing of work. And the world of tasks - doing productive, intelligent work - that market is enormous. Measured in trillions.”

He gives the auto industry as an example. Artificial intelligence expands the market from demand for cars to demand for autonomous chauffeurs:

“The problem becomes larger. The opportunity becomes larger… Don’t be surprised if technology companies become much larger in the future because what you produce is something very different.”

Video source: @AcquiredFM (2023)
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A quality valuation analysis on $MSFT 🧘🏽‍♂️

•NTM P/E Ratio: 27.29x
•3-Year Mean: 30.51x

•NTM FCF Yield: 2.09%
•3-Year Mean: 2.46%

As you can see, $MSFT appears to be trading below fair value on a forward earnings basis

Going forward, investors can expect to receive ~12% MORE in earnings per share & ~18% LESS in FCF per share🧠***

Before we get into valuation, let’s take a look at why $MSFT is a super business

BALANCE SHEET✅
•Cash & Equivalents: $102.01B
•Long-Term Debt: $35.38B

$MSFT has an excellent balance sheet, an AAA S&P Credit Rating & 58x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2021: 31.1%
•2022: 34.0%
•2023: 30.9%
•2024: 29.7%
•2025: 28.0%

RETURN ON EQUITY✅
•2021: 47.1%
•2022: 47.2%
•2023: 38.8%
•2024: 37.1%
•2025: 33.3%

$MSFT has strong return metrics, highlighting the financial efficiency of the business

REVENUE✅
•2021: $168.09B
•2026E: $326.83B
•CAGR: 14.22%

FREE CASH FLOW🆗*
•2021: $56.12B
•2026E: $75.05B
•CAGR: 5.98%

*This is largely due to heavy AI-related reinvestment — current 2028 FCF estimate $116.45B — worth noting operating cash flow increases underscore $MSFT efficient AI infrastructure scaling validating high ROI-potential

NORMALIZED EPS✅
•2021: $7.97
•2026E: $16.26
•CAGR: 15.32%

SHARE BUYBACKS✅
•2016 Shares Outstanding: 8.01B
•LTM Shares Outstanding: 7.46B

By reducing its shares outstanding ~7%, $MSFT increased its EPS by ~8% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 68.8%
•LTM Operating Margins: 46.3%
•LTM Net Income Margins: 35.7%

PAID DIVIDENDS✅
•2015: $1.24
•2025: $3.32
•CAGR: 10.34%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~12% MORE in EPS & ~18% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MSFT has to grow earnings at a 13.65% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2026 - 2028 EPS growth over the next few years to be more than the (13.65%) required growth rate:

2026E: $16.26 (19% YoY) *FY Jun

2027E: $18.75 (15% YoY)
2028E: $22.31 (19% YoY)

$MSFT has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $MSFT ends 2028 with $22.31 in EPS & see its CAGR potential assuming different multiples

30x P/E: $669💵 … ~17.9% CAGR

29x P/E: $647💵 … ~16.3% CAGR

28x P/E: $625💵 … ~14.7% CAGR

27x P/E: $602💵 … ~13.0% CAGR

26x P/E: $580💵 … ~11.3% CAGR

As you can see, we’d have to assume ~28x multiple for $MSFT to have attractive return potential

At 26x - 27x earnings $MSFT has ok CAGR potential

If $MSFT multiple expands slightly, >15% CAGR

$MSFT is one of the highest quality companies in the world & is firing on all cylinders

Today at $454💵 $MSFT appears to be a strong consideration for investment with a decent margin of safety

$MSFT has large margin of safety at $420💵, where I can reasonably expect ~13% CAGR while assuming a more conservative 25x
___

𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️

𝐓𝐡𝐢𝐬 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐚𝐧𝐝 𝐞𝐝𝐮𝐜𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐜𝐨𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐞 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞, 𝐚𝐧 𝐨𝐟𝐟𝐞𝐫, 𝐨𝐫 𝐚 𝐬𝐨𝐥𝐢𝐜𝐢𝐭𝐚𝐭𝐢𝐨𝐧 𝐭𝐨 𝐛𝐮𝐲 𝐨𝐫 𝐬𝐞𝐥𝐥 𝐚𝐧𝐲 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲.

𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐨𝐥𝐝 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝. 𝐀𝐧𝐲 𝐨𝐩𝐢𝐧𝐢𝐨𝐧𝐬 𝐞𝐱𝐩𝐫𝐞𝐬𝐬𝐞𝐝 𝐚𝐫𝐞 𝐚𝐬 𝐨𝐟 𝐭𝐡𝐞 𝐝𝐚𝐭𝐞 𝐨𝐟 𝐩𝐮𝐛𝐥𝐢𝐜𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐬𝐮𝐛𝐣𝐞𝐜𝐭 𝐭𝐨 𝐜𝐡𝐚𝐧𝐠𝐞 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐧𝐨𝐭𝐢𝐜𝐞.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲 𝐨𝐫 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐟𝐮�[...]

�𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
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Fiscal.ai
Intuitive Surgical now has >11,000 Da Vinci systems installed at healthcare facilities around the globe.

That installed base has roughly doubled over the last 6 years.

$ISRG https://t.co/lodpl3y5Jq
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Fiscal.ai
GE Aerospace just reported its biggest jump in orders ever.

Total orders were $27 billion this quarter, up 74% YoY.

$GE https://t.co/G8eKmT5zfa
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Quiver Quantitative
JUST IN: A new account on Polymarket just bet $20K that China will invade Taiwan this year.

They will win $178K if correct. https://t.co/3CwvzTmBld
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Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: $MSFT Quarterly Cloud Revenue ☁️ — has delivered >20% YoY growth for 12 straight quarters https://t.co/aEC66FKInG
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God of Prompt
Jeff Weiner built LinkedIn into THE professional network.

Now he's betting your calendar is next.

Think about it. Your calendar already knows who you actually spend time with. Who matters. Who you're avoiding.

Blockit wants to unlock that with AI agents that schedule instantly. Zero back-and-forth.

When the guy who built LinkedIn says "this is the next network"... I'm listening.

Congrats @blockitAI 🔥

BIG NEWS: Today we are launching @blockitAI -- the first AI scheduling agent that actually understands your time.

After spending my career as a partner at @sequoia, I stepped back to build this. Why?

Because I believe the calendar is the last untouched social network, and it can only now be unlocked through AI.

Our scheduling agent can handle any degree of complexity and has spread purely through virality to date.

Blockit now works for 200+ companies and has coordinated 100,000+ meetings — all with zero humans in the loop.

We're excited to emerge from stealth and announce our $5M raise from @sequoia led by Pat Grady (@gradypb) with participation from @haystackvc, @adjacent, Original, and NPV, i.e. Jeff Weiner, the former CEO of Linkedin.

Come for the agent, stay for the network — get started free today at https://t.co/9J0KjLklwv - Kais
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Quiver Quantitative
JUST IN: AOC on $CVS

"Health insurance gets a cut, the pharmacy benefit manager gets a cut, the drug manufacturer gets a cut, and the patient gets screwed" https://t.co/coHY9LwKre
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