Dan Loeb's Third Point Trims Amazon, Microsoft, Meta As Tech Stocks Climb
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 03 2025
0mins
Should l Buy MSFT?
Source: Benzinga
Third Point LLC Portfolio Adjustments: Activist investor Dan Loeb's Third Point LLC reduced its stakes in major companies like Pacific Gas & Electric, Amazon, Microsoft, and Meta during the third quarter of 2024, with PCG remaining the largest holding despite a decline in shares.
Company Performance Highlights: While Pacific Gas & Electric reported better-than-expected adjusted EPS, it fell short on revenue; Amazon's shares surged over the past year despite mixed results; Microsoft lagged behind technology indices, and Meta saw significant share growth.
Trade with 70% Backtested Accuracy
Stop guessing "Should I Buy MSFT?" and start using high-conviction signals backed by rigorous historical data.
Sign up today to access powerful investing tools and make smarter, data-driven decisions.
Analyst Views on MSFT
Wall Street analysts forecast MSFT stock price to rise
34 Analyst Rating
32 Buy
2 Hold
0 Sell
Strong Buy
Current: 401.840
Low
500.00
Averages
631.36
High
678.00
Current: 401.840
Low
500.00
Averages
631.36
High
678.00
About MSFT
Microsoft Corporation is a technology company that develops and supports software, services, devices, and solutions. Its Productivity and Business Processes segment consists of products and services in its portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. It comprises Microsoft 365 Commercial products and cloud services; Microsoft 365 Consumer products and cloud services; LinkedIn, and Dynamics products and cloud services. The Intelligent Cloud segment consists of its public, private, and hybrid server products and cloud services. It comprises server products and cloud services, including Azure, and enterprise and partner services, including Enterprise Support Services. Its More Personal Computing segment primarily comprises Windows and Devices, including Windows OEM licensing; Gaming, including Xbox hardware and Xbox content; Search and news advertising, comprising Bing and Copilot, Microsoft News, and Microsoft Edge.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Microsoft's Copilot User Growth and Market Potential
- User Growth Data: Microsoft revealed that Copilot reached 15 million paying users in its latest earnings call, reflecting a 160% year-over-year growth, although this figure appears small compared to its 450 million Microsoft 365 paid users, indicating potential market demand.
- Market Competition Analysis: While Copilot's conversion rate stands at approximately 3.3%, lower than ChatGPT's 5%, Microsoft's existing user base provides a solid opportunity for future growth through cross-selling, especially as AI tools become more mainstream.
- Revenue Potential Outlook: Should Microsoft achieve another 160% growth in users over the next year, it could generate an additional $8.6 billion in revenue, which represents nearly 3% of its projected $328 billion revenue for fiscal year 2026, highlighting Copilot's commercial value.
- Strategic Positioning and Competitive Advantage: With significant equity stakes in both OpenAI and Anthropic, Microsoft can leverage AI to enhance Microsoft 365's competitiveness, thereby maintaining its leadership in the office software market and mitigating competitive pressures in the future.
See More
Microsoft Faces Intensifying Competition in Cloud Computing
- Cloud Competition: Microsoft faces fierce competition in the cloud computing sector from Amazon and Alphabet, with Azure's revenue growth of 39% lagging behind Google Cloud's 48%, indicating market share pressures.
- Rising Infrastructure Costs: The company's increasing infrastructure costs have raised concerns among investors, as CFO Amy Hood noted a direct correlation between capital expenditures and Azure's revenue, potentially impacting future returns on investment.
- Stock Valuation Decline: Microsoft's price-to-earnings (P/E) ratio has fallen to 25, nearing its lowest level in three years, reflecting market caution regarding its growth prospects, despite analysts' price target of $596 suggesting a 48% upside.
- Investor Sentiment Weakens: Following the earnings report on January 28, Microsoft's stock has dropped 16%, leading to investor doubts about the returns from its AI infrastructure investments, although the low valuation may present a buying opportunity in the long run.
See More
Analysis of Vanguard S&P 500 ETF Investment
- Stable Long-Term Returns: The Vanguard S&P 500 ETF tracks the S&P 500 Index, which has averaged a 10% annual return since 1957, indicating that a $200 monthly investment could grow to approximately $395,000 over 30 years, showcasing its potential for long-term wealth accumulation.
- Market Volatility Risk: While the ETF has historically achieved positive returns through every recession and bear market, its market-cap-weighted structure means that tech stocks now comprise over 34% of the fund, with significant holdings in Nvidia, Apple, and Microsoft, potentially leading to increased short-term volatility.
- Tech Stock Dominance: The rapid growth of tech companies has led to their rising share in the ETF, with Nvidia alone accounting for nearly 8%, which, while boosting recent performance, also implies greater risk if the tech sector faces downturns.
- Caution for Investors: Although the S&P 500 ETF is likely to yield positive returns in the long run, its heavy reliance on tech stocks could introduce unexpected risks during market fluctuations, necessitating careful consideration of individual risk tolerance when investing.
See More
U.S. Secretary of State Reaffirms Support for Europe at Munich Security Conference
- Reaffirmation of U.S.-Europe Relations: U.S. Secretary of State Marco Rubio emphasized at the Munich Security Conference that “we want Europe to be strong,” indicating a commitment to repairing relations and enhancing cooperation on security and economic fronts.
- Inflation Data Decline: The U.S. consumer price index rose 2.4% year-on-year in January, down from 2.7% in December, with core CPI at 2.5%, the lowest since April 2021, suggesting that if this trend continues, it could pave the way for lower interest rates and positively impact markets.
- Japan's Economic Recovery: Japan's GDP grew by 0.1% in the fourth quarter, missing the expected 0.4% but reversing a 0.7% contraction in the previous quarter, indicating potential for economic recovery and avoiding a technical recession.
- Surge in Cryptocurrency Crime: Cryptocurrency payments linked to suspected human trafficking surged by 85% in 2025, highlighting the expansion of a criminal ecosystem in Southeast Asia, which may prompt regulatory scrutiny and responses.
See More
U.S. Consumer Price Index Falls to 2.4%, Easing Inflation Concerns
- Inflation Data Eases: The U.S. Consumer Price Index rose 2.4% year-on-year in January, down from 2.7% in December, indicating a potential easing of inflation pressures, which could influence the Federal Reserve's interest rate decisions.
- Core CPI Insights: The core CPI registered at 2.5%, marking the lowest level since April 2021, aligning with economists' expectations, suggesting that inflation may be gradually coming under control, which is favorable for market sentiment.
- Cautious Market Reaction: Despite the positive inflation data, major U.S. indexes experienced slight declines on Friday, reflecting ongoing investor uncertainty regarding the impacts of artificial intelligence, leading to a cautious market atmosphere.
- International Relations Improvement: Signs of easing tensions between the U.S. and Iran emerged as both sides prepare for a second round of talks in Geneva, with Iran expressing readiness to discuss nuclear program restrictions in exchange for economic benefits, potentially creating a positive market impact.
See More
AI Summit in India Attracts Tech Giants
- Market Validation: The AI Impact Summit in India has attracted CEOs from tech giants like Nvidia, OpenAI, and Alphabet, highlighting the global business community's recognition of India's market potential, which is expected to drive future investments and collaborations.
- Infrastructure Investment: With rising demand for AI data centers, significant infrastructure investment deals are anticipated, further solidifying India's position as a global hub for AI technology.
- Talent Attraction: India is regarded as an 'AI talent factory,' with over 60% of Global Capability Centers focusing on AI and data development, and 80% of new centers projected to be AI-led in the next six to eight months, indicating a strong demand for tech talent.
- Executive Position Growth: An increasing number of firms are establishing senior leadership roles, such as 'Chief AI Officer,' in India, reflecting a reliance on local talent and a focus on the AI sector, which enhances competitiveness in the global market.
See More
Microsoft's Copilot User Growth and Market Potential
- User Growth Data: Microsoft revealed that Copilot reached 15 million paying users in its latest earnings call, reflecting a 160% year-over-year growth, although this figure appears small compared to its 450 million Microsoft 365 paid users, indicating potential market demand.
- Market Competition Analysis: While Copilot's conversion rate stands at approximately 3.3%, lower than ChatGPT's 5%, Microsoft's existing user base provides a solid opportunity for future growth through cross-selling, especially as AI tools become more mainstream.
- Revenue Potential Outlook: Should Microsoft achieve another 160% growth in users over the next year, it could generate an additional $8.6 billion in revenue, which represents nearly 3% of its projected $328 billion revenue for fiscal year 2026, highlighting Copilot's commercial value.
- Strategic Positioning and Competitive Advantage: With significant equity stakes in both OpenAI and Anthropic, Microsoft can leverage AI to enhance Microsoft 365's competitiveness, thereby maintaining its leadership in the office software market and mitigating competitive pressures in the future.
See More
Microsoft Faces Intensifying Competition in Cloud Computing
- Cloud Competition: Microsoft faces fierce competition in the cloud computing sector from Amazon and Alphabet, with Azure's revenue growth of 39% lagging behind Google Cloud's 48%, indicating market share pressures.
- Rising Infrastructure Costs: The company's increasing infrastructure costs have raised concerns among investors, as CFO Amy Hood noted a direct correlation between capital expenditures and Azure's revenue, potentially impacting future returns on investment.
- Stock Valuation Decline: Microsoft's price-to-earnings (P/E) ratio has fallen to 25, nearing its lowest level in three years, reflecting market caution regarding its growth prospects, despite analysts' price target of $596 suggesting a 48% upside.
- Investor Sentiment Weakens: Following the earnings report on January 28, Microsoft's stock has dropped 16%, leading to investor doubts about the returns from its AI infrastructure investments, although the low valuation may present a buying opportunity in the long run.
See More
Analysis of Vanguard S&P 500 ETF Investment
- Stable Long-Term Returns: The Vanguard S&P 500 ETF tracks the S&P 500 Index, which has averaged a 10% annual return since 1957, indicating that a $200 monthly investment could grow to approximately $395,000 over 30 years, showcasing its potential for long-term wealth accumulation.
- Market Volatility Risk: While the ETF has historically achieved positive returns through every recession and bear market, its market-cap-weighted structure means that tech stocks now comprise over 34% of the fund, with significant holdings in Nvidia, Apple, and Microsoft, potentially leading to increased short-term volatility.
- Tech Stock Dominance: The rapid growth of tech companies has led to their rising share in the ETF, with Nvidia alone accounting for nearly 8%, which, while boosting recent performance, also implies greater risk if the tech sector faces downturns.
- Caution for Investors: Although the S&P 500 ETF is likely to yield positive returns in the long run, its heavy reliance on tech stocks could introduce unexpected risks during market fluctuations, necessitating careful consideration of individual risk tolerance when investing.
See More
U.S. Secretary of State Reaffirms Support for Europe at Munich Security Conference
- Reaffirmation of U.S.-Europe Relations: U.S. Secretary of State Marco Rubio emphasized at the Munich Security Conference that “we want Europe to be strong,” indicating a commitment to repairing relations and enhancing cooperation on security and economic fronts.
- Inflation Data Decline: The U.S. consumer price index rose 2.4% year-on-year in January, down from 2.7% in December, with core CPI at 2.5%, the lowest since April 2021, suggesting that if this trend continues, it could pave the way for lower interest rates and positively impact markets.
- Japan's Economic Recovery: Japan's GDP grew by 0.1% in the fourth quarter, missing the expected 0.4% but reversing a 0.7% contraction in the previous quarter, indicating potential for economic recovery and avoiding a technical recession.
- Surge in Cryptocurrency Crime: Cryptocurrency payments linked to suspected human trafficking surged by 85% in 2025, highlighting the expansion of a criminal ecosystem in Southeast Asia, which may prompt regulatory scrutiny and responses.
See More
U.S. Consumer Price Index Falls to 2.4%, Easing Inflation Concerns
- Inflation Data Eases: The U.S. Consumer Price Index rose 2.4% year-on-year in January, down from 2.7% in December, indicating a potential easing of inflation pressures, which could influence the Federal Reserve's interest rate decisions.
- Core CPI Insights: The core CPI registered at 2.5%, marking the lowest level since April 2021, aligning with economists' expectations, suggesting that inflation may be gradually coming under control, which is favorable for market sentiment.
- Cautious Market Reaction: Despite the positive inflation data, major U.S. indexes experienced slight declines on Friday, reflecting ongoing investor uncertainty regarding the impacts of artificial intelligence, leading to a cautious market atmosphere.
- International Relations Improvement: Signs of easing tensions between the U.S. and Iran emerged as both sides prepare for a second round of talks in Geneva, with Iran expressing readiness to discuss nuclear program restrictions in exchange for economic benefits, potentially creating a positive market impact.
See More
AI Summit in India Attracts Tech Giants
- Market Validation: The AI Impact Summit in India has attracted CEOs from tech giants like Nvidia, OpenAI, and Alphabet, highlighting the global business community's recognition of India's market potential, which is expected to drive future investments and collaborations.
- Infrastructure Investment: With rising demand for AI data centers, significant infrastructure investment deals are anticipated, further solidifying India's position as a global hub for AI technology.
- Talent Attraction: India is regarded as an 'AI talent factory,' with over 60% of Global Capability Centers focusing on AI and data development, and 80% of new centers projected to be AI-led in the next six to eight months, indicating a strong demand for tech talent.
- Executive Position Growth: An increasing number of firms are establishing senior leadership roles, such as 'Chief AI Officer,' in India, reflecting a reliance on local talent and a focus on the AI sector, which enhances competitiveness in the global market.
See More
