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Wednesday, October 28, 2026

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@SouthernValue95

SouthernValue on X

Right now AI diffusion is happening faster in enterprise than in consumer. $MSFT is effectively the only pure play on enterprise AI diffusion. It’s salesforce, FDE and partner ecosystem, and the security, orchestration and governance capabilities of its platform uniquely unlock new AI TAM in traditional conservative enterprises. My prediction that M365 commercial would accelerate to >20% growth may come true next quarter, based on tonight’s guide. Sooner than I expected*. $MSFT will now have Azure and M365, which are 2/3 of revenue, growing >50% and >20%. And both stand a good chance of accelerating through the year: more copilot rollout, consumption pricing, and Autopilot for M365, and more capacity coming online and price increases for Azure. I still think $24-25 EPS is achievable in CY27 which would make $MSFT <22x fwd PE, even after a nice run. *helped by re-segmenting which added GitHub! But I think will be true this year regardless.
@SouthernValue95

SouthernValue on X

My prediction that M365 commercial would accelerate to >20% growth may come true next quarter, based on tonight’s guide. Sooner than I expected*. Right now AI diffusion is happening faster in enterprise than in consumer. $MSFT is effectively the only pure play on enterprise AI diffusion. It’s salesforce, FDE and partner ecosystem, and the security, orchestration and governance capabilities of its platform uniquely unlock new AI TAM in traditional conservative enterprises. $MSFT will now have Azure and M365, which are 2/3 of revenue, growing >50% and >20%. And both stand a good chance of accelerating through the year: more copilot rollout, consumption pricing, and Autopilot for M365, and more capacity coming online and price increases for Azure. I still think $24-25 EPS is achievable in CY27 which would make $MSFT <22x fwd PE, even after a nice run. *helped by re-segmenting which added GitHub! But I think will be true this year regardless.
@orrdavid

David Orr on X

Another thing: This post is *not* meant to call a short term top. I sometimes want to. Maybe even I have hinted that's what I think. But that's wrong. The best way to think is, "I don't know when the top will be, maybe $SOXX really does take another 100% leg up first, who knows, why not." But that next big move up or down seems like a pure guess to me. So at least for making a binary bet - a bet on $SOXX beta - it's a pure casino. There probably is some brilliant way to structure this trade, though. You're long compute and you're short the things that more intelligence kills - like really kills, not that benefits from AI letting them cut 90% of their staff. For my part, there are just way too many eyes on the trade for me to be all that interested, though. Because if too many smart people figure out how to solve that fundamentally guess what ... the long/short could easily blow up in a month, just before the collapse, since the market won't often give such large crowds a free lunch pair trade. I say screw all of that, better to just focus on real investments, in the real world, that likely benefit from AI or at least don't get hurt. That is not a gamble today, and lots of those stocks are just straight up cheap. The only downside is that the AI trade will probably keep the stocks trading weak ... but this side is NOT hard to do broad, uncrowded pair trades on, so who cares.

Investor Letters

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Danaher’s robotics era

Danaher’s new CEO paired a Q3 beat and raised EPS outlook with a 2027 4%-5% organic-growth starting point, while pitching AI-enabled…

DHR $163B
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UHS · long

Universal Health Svcs INC

Universal Health Services is a profitable hospital operator whose $146 share price over-discounts an earnings-collapse scenario.

UHS $10B
Value Investors Club 5 clicks

Research Roundup Vol. XLVIII

Palantir’s Q2 revenue beat, Sony’s physical-media exit and Diamondback’s Permian gas constraints frame a roundup on AI adoption, oil prices…

PLTR $429BSONY $149B
Monte Independent Investment Research 1 click

Entravision Q2 Notes

Entravision’s ATS revenue rose 230% to $182.8 million in Q2, but shares fell from above $14 to about $8 after management forecast…

EVC $638M
The Value Road 13 clicks

Lumentum Q4 FY26 Earnings

Lumentum’s CW lasers offer wider mode-hop-free operating ranges for co-packaged optics, supporting premium pricing and 80–90%…

LITE $62B
Irrational Analysis

Trading Post August 11, 2026

Molina Healthcare was increased at $198 to a full position, with political-season benefits supporting the long-term thesis.

MOH $11B
Cassandra Unchained 1 click

Sea Limited Earnings Update: A quick look

Sea Limited reported Q2 2026 revenue of $7.8 billion, up 48%, as Shopee, Monee and Garena lifted adjusted EBITDA to $917 million.

SE $45B
SixSigmaCapital: Navigating the Financial Markets

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