Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: In hindsight, perhaps a year from today, the brief moment $MSFT traded at ~26x may look like an obvious opportunity hiding in plain sight. https://t.co/G5EHiyA5AB

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 𝐫𝐞𝐥𝐢𝐚𝐛𝐥�[...]

� 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲 𝐨𝐫 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬. - Dimitry Nakhla | Babylon Capital® tweet

memenodes
No way... https://t.co/SopWhZ5fjK
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memenodes
How mfs be waiting for you to fuck up and lose everything https://t.co/vy9dHwbhx2
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Brady Long
Just called my mom and told her I love her

Claude in Excel is now available on Pro plans.

Claude now accepts multiple files via drag and drop, avoids overwriting your existing cells, and handles longer sessions with auto compaction.

Get started: https://t.co/cAMDXM1h7r https://t.co/yt9Gy2HLY3 - Claude
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memenodes
That feeling of ignoring a message you once prayed to receive https://t.co/CSLtv1Qi1W
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God of Prompt
RT @alex_prompter: Grok is one of the most intelligent AI chatbots right now.

But 90% of people don't know how to prompt it properly.

That's why we built the "Grok Mastery Guide" packed with:
→ Prompt engineering mini-course (6 chapters)
→ 30 key prompting principles
→ 10+ mega-prompts for business
→ Strategic use cases most people miss
→ Mega-prompt template

Like + comment "Grok" and I'll DM you the doc.
(Must be following)
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God of Prompt
RT @prompt_copilot: MIT tested 1,900 people on AI performance.

50% was the model.
50% was the prompt.

Your skill matters as much as the model itself. https://t.co/b43Q9l16bM
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Fiscal.ai
PayPal over the last 5 years:

Earnings per Share: +88%
Stock Price: -72%

$PYPL https://t.co/BFmRjYW6dL
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Startup Archive
Sam Altman on what it means to be product-focused

In his Startup Playbook, Sam writes:

“Your goal as a startup is to make something users love. If you do that, then you have to figure out how to get a lot more users. But this first part is critical—think about the really successful companies of today. They all started with a product that their early users loved so much they told other people about it. If you fail to do this, you will fail. If you deceive yourself and think your users love your product when they don’t, you will still fail.”

In this interview, he explains what it means to be product-focused:

“Maybe if you’re really good and really dedicated, you can work like 70 really productive hours in a week. So you have 70 hours to allocate and there’s the question of how you allocate those. When we [at Y Combinator] say ‘focus on product,’ it means that you put almost all of those hours into talking to users, creating product, and making sure that you have some users that really love your product.”

Sam continues:

“Most startups in the early days face a choice of either 1) getting a lot of users that like your product but don’t love it; or 2) a small number of users that really love your product. Every really successful company that I have been involved with has been in that second category. So, focus on product means: focus on love, not like; and spending your time writing code and talking to users. You need to get the product to the point where some people would be really bummed if it went away.”

Video source: @GreylockVC (2015)
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God of Prompt
Steal my prompt to turn any LLM into a context engineering expert

Embeds:
→ Anthropic’s official research
→ arXiv taxonomy (1400+ papers)
→ Chroma’s context rot data
→ Claude Code production patterns

Here’s the prompt 👇 https://t.co/S7bLZWSYRN
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