Microsoft Is Down 25% From Its High While the Nasdaq Blasts Off. Burry and Ives Say That Is the Opportunity

The Nasdaq 100 and S&P 500 are blasting off with AI taking charge and more Magnificent Seven making fresh all-time highs. Despite the vicious upside rally, though, shares of Microsoft (NASDAQ:MSFT | MSFT Price Prediction) have continued to struggle. The stock dipped just over 0.6% on Wednesday in what was a great day for tech, with the Nasdaq 100 gaining more than a percentage point. At this point, it seems like Microsoft is no longer worthy of a spot in the Mag Seven.

The stock is still down over 25% from its high, and with certain SaaS stocks still under pressure as AI advances, questions linger as to whether the software side of the business should warrant Microsoft’s relative discount.

Microsoft doesn’t deserve to be dragged down alongside the rest of software

Unlike most other SaaS firms that are at risk of severe cannibalization, though, Microsoft looks incredibly well-positioned to shift gears into the agentic age. If it means fewer Office or Dynamics licenses will be sold at the hands of next-generation AI-native applications, at the very least, Azure stands to gain as agents spark an increased appetite for tokens. Other SaaS players don’t have that same luxury.

Also, given that Microsoft Windows is the operating system of choice for the enterprise, it feels like the entire ecosystem has a wide moat, even as some of the AI-native frontier plays look to reinvent the operating system with agentics front and center.

In my view, Microsoft is more likely to succeed with the agentization of its operating system. Arguably, the company is already on the right track, with Agent 365 already on the fast track. With Agent 365 recently graduating from “preview,” it will be interesting to see how the control plane can transform the workplace as it acts as a launch pad for the agentic revolution.

Why Microsoft might be one of the last real table pounders

Of course, the number-one reason to pound the table on Microsoft as it readies to go all-in on the AI revolution is the fact that Dr. Michael Burry recently disclosed a long position in the name. The man is known to bet big on underappreciated companies that the market is missing out on, and I think he’s right to go against the grain with the biggest Mag Seven laggard to date.

Aside from Burry’s bet, Dan Ives over at Wedbush Securities praised Microsoft as a “table pounder” because of its huge cloud backlog and the potential for Azure to enter what could be a “true inflection year.” If Ives is right, Microsoft stock might be going for 35-40 times trailing price-to-earnings (P/E) again. 

Add the potential to upsell opportunity with Copilot into the equation as it becomes more powerful and deeply embedded, and I think Ives is spot-on when he highlights the opportunity to be had in Copilot. Sure, Copilot is facing some stiff competition these days, but given Microsoft’s seriously impressive graph of the everyday user and the enterprise, I think investors might be underestimating the company’s ontological edge. 

The bottom line when it comes to Microsoft

If you believe in Microsoft’s AI strategy and think it can make up major ground in this AI race with its rapidly improving Copilot and the rise of Agent 365, there’s no question that the stock looks like more of a gift than anything else.

Whether you’re in for an Azure inflection point or the unrealized potential in Copilot and Agent 365, you’re getting a lot of potential growth surprises at a very compelling discount with the name right here. Of course, the thumbs up from Dan Ives and Michael Burry make a strong buy-the-dip candidate that much stronger.