At a 6-Month Low, Here’s My Top Dow Jones Stock to Buy Now

The following graph shows how the rapid Microsoft sales growth in recent years also came with higher margins, a testimony of artificial intelligence investments.

However, there are fears that Microsoft Amnesty International spending may be excessive.

This fiscal year, the administration plans to spend $ 80 billion on cloud -based requests. The massive investment can affect profitability in the short term.

The analysts' consensus estimates to $ 13.16 in the profits of 2025 for the financial share (EPS) and $ 15.07 in 2026 EPS. For the context, Microsoft has reached $ 11.80 in the reduced EPS in the fiscal year 2024, an increase of 20 % compared to the fiscal year 2023, while the 2025 financial target involves only 11.2 % growth. So at least in the short term, the growth growth is slowdown. The margins can also decrease if artificial intelligence spending is not immediately translated into measurable results.

At any time the company is betting on a big idea, it puts pressure on these investments to pay its fruits. But there is also a risk to be very idle and a decrease in the artificial intelligence race.

Therefore, the two biggest questions must be asked by investors whether the company can spend this a lot on artificial intelligence without hurting its financial health, and if the investment dollars are heading towards efforts worthy of attention.

Regarding financial health, Microsoft is good as you happen. The company has finished the calendar year 2024 with $ 71.56 billion in cash, cash rewards, short -term investments and only $ 39.72 billion of long -term debts. In the fiscal year 2024, which ended on June 30, 2024, it redrared $ 17.25 billion of shares and paid $ 21.77 billion of profits. Although the payment batch was higher, re -purchases were less than $ 5 billion in the fiscal year 2023.

The administration can continue to retreat from re -equipping shares to finance artificial intelligence investments without getting more debt. However, purchases have helped compensate for compensation for Microsoft shares, reduce the number of shares over time, and accelerate EPS growth. Less than re -purchase will pressure the basic work to push profit growth.

In short, Microsoft can spend more on artificial intelligence.

As for the second question, there is a reason for the belief that artificial intelligence investments deserve it. Microsoft is currently the cloud player 2, advanced alphabetGoogle cloud but behind it Amazon Web services.

As the demand for cloud computing is growing to support the workflow of artificial intelligence, Microsoft wants to ensure that it is in a good position in obtaining the market share by providing advanced data centers and the best artificial intelligence services. If it does not take its share in the market, its investments can still bear fruit as long as the total cloud computing pie grows.

As an ancient technical company, Microsoft has not been converted by artificial intelligence in the same way as smaller and fastest growing companies like Palantir Technologies Or more pure artificial intelligence names such as NVIDIA. But it was positive for the company. It has Microsoft Financial Health and the deep pockets needed to pour money in building an Amnesty International's infrastructure.

The price of the rising arrow and the growth of fixed profits pushed a price ratio to symbols from Microsoft (P/E) to its lowest level per year. In fact, P/E is currently 33, which is around its average over the past three years to the past ten years. But it can be said that it is a high -quality work with the risk of better growth today from the past years, which makes its evaluation more convincing.

As we mentioned, the administration spends a ton on stock profits every year. The company has increased the payment of its payments every year nearly two decades ago, and although the shares give only 0.8 %, the increasing profit distributions from Microsoft provides an additional incentive to buy and keep the shares.

Through a varied business model, AI's budget at reasonable prices, reasonable evaluation, Microsoft examines all funds for an essential growth arrow for purchase now and building a portfolio around it.

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He continues.

*The stock consultant dates back from February 21, 2025

Randy Zuckerberg, former Director of Market Development and Speak for Facebook and Sister to Meta Platforms, Mark Zuckerberg, member of Motley Fool Board of Directors. John Maki, former Chole Foods Market, a affiliate company, a member of the Motley Fool Board of Directors. Susan Fry, CEO of Alphabet, is a member of the Motley Fool Board of Directors. Daniel Fileber He has no position in any of the mentioned stocks. Motley Fool has positions in Technologies Alphabet, Amazon, Meta, Microsoft, Nvidia and Palantir. Motley Fool recommends the following options: Long January $ 2026 $ 395 on Microsoft and Short January 2026 $ 405 calls on Microsoft. Motley deception has Disclosure.

At the lowest level of 6 months, here are the shares of Dow Jones Top Download now It was originally published by Motley Fool