Have you ever watched a stock you love get absolutely hammered for reasons that just don’t make sense when you zoom out a little? That’s exactly what’s been happening with Microsoft lately, and it’s driving some of the sharpest investors I follow absolutely crazy—in a good way.
The shares are up a respectable 14% on the year, sure, but they’ve shed more than 10% since the last earnings call. The narrative? Too much spending on data centers, Google catching up, maybe the whole AI thing was overhyped. Sound familiar? It should. We’ve heard versions of this story before, and more often than not, the investors who kept their nerve ended up smiling years later.
Why the Market Is Missing the Forest for the Trees
Let’s be honest: when a company the size of Microsoft expands operating margins while simultaneously pouring billions into the infrastructure that will power the next decade of computing, calling that “disappointing” feels a little dramatic.
One of the most respected voices in the investment world, Stephanie Link from Hightower Advisors, went on television and basically said the current pessimism is ridiculous for a company of this scale. She didn’t just defend Microsoft—she opened a brand-new position because she thinks the sell-off has created a rare entry point.
“I know it’s a crowded name, but I just think that that’s the opportunity. I care more about the ecosystem at large at this company, and they are participating in the fast growth of AI and I don’t think it’s really appreciated.”
That quote stopped me in my tracks. Because she’s not wrong. The multiple has compressed five full points from its historical average. Five points! On a company that is quite literally building the rails for the entire AI economy.
The Ecosystem Advantage Nobody Wants to Price In
Think about what Microsoft actually owns right now. Azure is the only cloud that can realistically scale enterprise AI workloads at the level governments and Fortune 500 companies need. GitHub is the de facto collaboration platform for developers building tomorrow’s models. Office 365 has hundreds of millions of users whose daily documents are about to get a lot smarter with Copilot. And yes, there’s the OpenAI partnership that keeps getting dismissed as “just ChatGPT exposure.”
It’s not “just” anything. It’s the deepest integration of frontier AI into productivity software the world has ever seen. And every time a company pays for Copilot, Microsoft makes money on the cloud usage, the license, and the data flowing through its ecosystem. That’s what people mean when they talk about flywheel effects—and Microsoft’s flywheel is spinning faster than ever.
Yet the stock trades like the market expects AI to be a passing fad. In my view, that disconnect won’t last forever.
Snowflake: The Quiet AI Pick That Keeps Running
While everyone obsesses over chip makers and model builders, some of the biggest winners in AI are the companies that handle the mountains of data these models need to train and run.
Enter Snowflake. Up more than 70% this year, it’s been one of the quiet monsters of the entire AI trade. Link still loves it, and I get why. Every company racing to build AI applications first needs clean, accessible data. Snowflake sits right in the middle of that pipeline.
- Exploding data volumes from sensors, logs, clicks
- Need to clean and structure that data for AI training
- Snowflake’s consumption-based model means revenue scales with usage
- Margins are expanding as the platform matures
She pointed out something interesting, too—she actually prefers Snowflake right now over some of the more famous software names that have gotten ridiculously expensive for the growth they’re delivering. The bar is high after this year’s run, no question. But if they keep beating on the top line and show margin leverage, the stock still has legs.
Palo Alto Networks: When Acquisitions Scare the Market
Cybersecurity is another area where the AI boom is creating massive tailwinds. More models, more data, more endpoints—all of it becomes a bigger attack surface. That’s why Link has been aggressively buying Palo Alto Networks on weakness.
The stock is up only about 3% this year. That’s wild when you think about it. One of the best-run companies in the entire sector, trading like it’s going out of business. The culprit? A string of acquisitions that have investors nervous about integration risk.
Fair concern—except this management team has executed roll-up strategies before with flying colors. Recent deals in identity security, observability, and AI-native protection aren’t expenses. They’re the building blocks of the most comprehensive security platform on the planet.
“If there’s any management that can get this thing done, it’s this management team.”
– Stephanie Link
She’s choosing Palo Alto over some of the higher-flying pure-play names because the valuation gap has simply gotten too wide. Sometimes the market punishes excellence in the short term. Patient investors tend to do just fine when sentiment flips.
The Bigger Picture: We’re Still Early
Link described us as being in the “second inning” of the AI trade. I actually think that might be generous. When I look at enterprise adoption curves, at the amount of legacy software still waiting to be re-written with AI, at the infrastructure build-out that still needs to happen—it feels more like we’re just finishing warm-ups.
Capital expenditure scares come and go. Remember when Amazon spent years getting punished for AWS build-out costs? How did that turn out? Microsoft is walking the exact same path, just with an even larger end market.
The companies that control the stack—cloud, data, security, productivity—are going to be the ones that compound for years. And right now, some of those names are on sale because the market is having a temporary panic attack about spending levels.
I’ve been doing this long enough to know that these moments don’t last. The same investors who are scared today will be chasing these stocks eighteen months from now when the numbers prove the skeptics wrong—again.
So yeah, I’m listening closely when someone with Stephanie Link’s track record steps in front of the camera and says the selling has gone too far. History has a habit of rewarding that kind of conviction.
In a market obsessed with the next shiny object, sometimes the best opportunities hide in plain sight—inside companies everyone already thinks they understand. Microsoft, Snowflake, and Palo Alto Networks aren’t secrets. But the magnitude of what they’re building with AI? That still feels dramatically underappreciated.
And underappreciated almost always means opportunity.
