Morningstar’s analyst unpacks Microsoft’s AI investments, revenue growth potential, and biggest risks while making the case for a $600 valuation. In this bonus episode of The Morning Filter podcast, co-host Dave Sekera and Morningstar senior equity analyst Dan Romanoff take a deep dive into one of Sekera’s top stock picks: Microsoft MSFT. Microsoft isn’t just a software company; it’s a portfolio of businesses, and Sekera and Romanoff discuss the company’s individual segments. They cover why Microsoft remains a wide moat company in the face of AI disruption and walk through its moat sources. They unpack Morningstar’s forecasts for the company’s AI spending, revenue, and margins, and explain how Romanoff arrives at a $600 fair value estimate for Microsoft stock. They wrap up with a discussion about the key risks Microsoft faces today. Episode Highlights: 00:00:00 Welcome 00:01:14 Microsoft isn’t a typical software company. 00:07:20 What Microsoft’s key competitive advantages are and why they’re durable. 00:15:28 How much Microsoft might spend on artificial intelligence and how quickly revenue could grow in relation to the company’s AI build out. 00:25:50 Forecasts for Microsoft’s revenue, operating margin, and earnings. 00:33:27 Why Morningstar is more constructive on Microsoft stock today than the market is. 00:42:33 The biggest risk to our $600 valuation on Microsoft stock. Read about topics from this episode. After Earnings, Is Microsoft a Buy, Sell or Fairly Valued?: https://www.morningstar.com/stocks/after-earnings-is-microsoft-stock-buy-sell-or-fairly-valued-10 Microsoft Earnings: Azure and Capital Expenditures Are Expected to Accelerate: https://www.morningstar.com/stocks/microsoft-earnings-azure-capital-expenditures-are-expected-accelerate MSFT: This Might Be the Best Core Stock Bargain in the Market Today: https://www.morningstar.com/stocks/this-might-be-best-core-stock-bargain-market-today Have an idea for a bonus episode? Send it to themorningfilter@morningstar.com. Follow us on social media. Dave Sekera on X: @MstarMarkets https://x.com/MstarMarkets Dave Sekera on LinkedIn: https://www.linkedin.com/in/davesekera Facebook: https://www.facebook.com/MorningstarInc/ X: https://x.com/MorningstarInc Instagram: https://www.instagram.com/morningstarinc/?hl=en LinkedIn: https://www.linkedin.com/company/morningstar/posts/?feedView=all If you would like more information about any of the stocks Dave talked about today can visit Morningstar.com for more details. Subscribe to The Morning Filter to get notified when we post next. We’ll see you on Monday! This episode is sponsored by Vanguard: https://advisors.vanguard.com/engagement/fixed-income