Stephanie Link Sells Microsoft: Why She's Shifting to Other Sectors

Stephanie Link's Microsoft Position

• 💡 Stephanie Link, CIO at Hightower, explains her decision to sell a small position in Microsoft.
• 📉 Despite a good reported quarter, the stock's performance has been poor, leading to a personal loss of about 2%.
• ⚠️ The valuation of Microsoft is no longer compelling to her, prompting the sale.

Alternative Investment Strategies

• 📈 Link has been adding to energy positions, specifically mentioning Chevron and SLB.
• 🧐 She is also considering Dow Chemical and believes the commodity cycle has momentum.
• 💡 She suggests that the "Mag 7" stocks may be taking a pause, which she is observing.

Preferred Alternatives to Microsoft

• 🚀 Link prefers Broadcom due to its industry-high margins, free cash flow, AI exposure, and VMware software integration.
• 💰 Broadcom is seen as diversified with a strong management team and significant stock buybacks.
• ⚠️ In contrast, Microsoft has been declining almost daily since its December earnings report.

Other Mag 7 Holdings

• 📊 Link still holds Meta and Amazon, though she expresses frustration with both.
• 🎯 Meta is considered cheap at a 1x PEG ratio, given its growth and monetization of user time (up 5-7%).
• 🚀 Amazon is praised for its accelerating AWS, growing retail segment, and strong advertising growth (up 22%), despite flat stock performance over the past year.

Contrasting Views on Microsoft

• ❓ Jason, who owns Microsoft, acknowledges the poor price action over the last six months.
• 📈 He notes Microsoft's 18% revenue growth and 25% EPS growth, with accelerating Azure and a potentially lifting PC market.
• ⚠️ He understands the concerns but plans to remain patient with the Microsoft investment.

Earning Season and Tech Outlook

• 🤖 Dan Ives anticipates AI validation for tech stocks during the upcoming earnings season, especially for cloud stalwarts like Microsoft, Alphabet, and Amazon.
• 📊 Josh expresses skepticism, noting that strong past earnings for tech stocks did not always translate to stock price increases.
• 🚀 He highlights tech's projected 29% earnings growth this year, significantly higher than other sectors, but questions if this will drive significant rallies.