Microsoft (NASDAQ: MSFT) is extending gains on April 24 after “Big Short” investor Michael Burry revealed a new position in the tech titan amidst ongoing AI-driven pressure on tech stocks.
This high-profile endorsement arrives only days before MSFT is scheduled to post its Q3 earnings.
Consensus is for the behemoth to earn $4.07 a share on $81.4 billion in revenue, up 16% year-on-year.
Ahead of the quarterly print, Microsoft stock has had a significant run – currently up roughly 18% versus its recent low.
Burry’s bullish view on Microsoft stock
Burry characterised MSFT shares as a “bombed-out” opportunity within software in a Substack post on Thursday.
According to him, recent weakness in the likes of Microsoft due to disappointing guidance from peers including ServiceNow and IBM is a classic case of market overreaction and – therefore – indicates an opportunity for long-term investors.
“I didn’t sell any software stocks,” Burry declared – noting that while some businesses are indeed at risk, he has “forensically” analysed Microsoft and believes it possesses the competitive moat to thrive.
Even from a technical perspective, MSFT remains firmly above its 20- and 50-day moving averages (MAs), reinforcing that the recent pullback hasn’t shaken bulls entirely out of the trade.
TD Cowen sees significant further upside in MSFT shares
TD Cowen analysts also agree with Burry’s constructive view on Microsoft shares.
On Friday, the investment firm maintained its “buy” rating on the Nasdaq-listed firm, with a $540 price target indicating potential upside of nearly 30% from current levels.
In their research note, analysts attributed their positive stance primarily to the steepening adoption curve of Microsoft 365 Copilot.
TD Cowen raised its compound annual growth rate (CAGR) estimate for Office 365 Commercial Cloud business to 15% through the end of this decade – up from a 13.5% previously.
According to its experts, generative AI adoption is entering a “critical second phase,” where enterprise customers are moving from experimentation to full-scale deployment.
Their proprietary survey data indicates strong upgrade intentions over the next 12 to 18 months, driven by the new E7 bundle and the release of Copilot Cowork.
Where options data suggests Microsoft is headed next
Heading into Microsoft’s Q3 earnings release, options pricing shows a bullish skew as well.
The put-to-call ratio on contracts expiring May 1 sits at 0.32 currently, with the upper price set at $443, indicating MSFT stock could be trading up more than 5% from here right after earnings.
What’s also worth mentioning is that this Magnificent 7 stock is currently trading at a forward price-to-earnings (P/E) multiple of about 26x, which isn’t expensive at all for an AI beneficiary.
Microsoft Corp currently pays a small dividend yield of 0.87% as well, which makes it even more attractive as a long-term holding in 2026.
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