Talk about about a change of heart! Mention the word AI and certain stocks come to mind, but few more so than hashtag#MSFT.
It’s well known that investor attitudes to AI story have changed – it’s gone from buy everything associated with AI due to the exponential growth potential to focus on extraordinary Capex and the return on that.
With the shares having fallen from $531 to $364 perhaps now is the time to take a look at the stock and ask at what point did things change in the eyes of investors and could we have seen it unfold with our own eyes. The answer is yes.
The chart you are seeing is the Fair Value range which shows the likely distribution of returns around the central Fair Value – the upside / downside.
Most of the time, the share price will trade within that range, but when it doesn’t there’s a reason. Investor’s change in sentiment and assessment of risk and that has been happening in plain sight if you’re looking at Apollo.
What you see here is the shares falling below the bottom of the range in April 2025 – a year ago as it happens. That was the warning sign and if I could add a further chart that showed the change in the discount rate, you would see this was the start of a long period of de-rating as seen though the Apollo Investment Cycle.
What else has changed? The Fair Value drivers. I showed this in a previous post related to LVMH (‘The market’s darling has lost it’s shine.’) – Another growth stock which has seen investors focus not on growth / top line /sales but Book Value. Book Value is the bottom line, that has been rising since October 2025.
That’s when you know investors are looking for a metric they can hang their hat on. This stock will reach a level at the point where investors believe sufficient risk is priced in and until a return on investment can be quantified and understood and seen recreate growth, MSFT is not going to be priced as a growth stock. It will change and when it does we will know.
Our job in working with our clients is to bring these changes to their attention so they can build their own picture and make their own decisions. Be interesting, relevant and right.
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