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☕ Microsoft - anybody who is not on-board risks missing everything

Jul 31, 2025

Howdy! 👋

Hold the press.

Treasury Secretary Bessent says we have the “makings of a deal with China” - a story that’s breaking as I type.

Good and right on cue.

That’ll bring a whole lot of money running that should have been there in the first place – oh, I dunno – like last April when I told you to buy into the worst of the selloff because there would eventually be a deal.

I hope you did.

The S&P 500 has tacked on 25.69% since then and many of the companies we talk about regularly have done considerably better which is why I encourage you to own ‘em and the OBA Family tell me they do.

What’s next?

That obviously depends on the deal, but we’ll cross that bridge if and when there really is one and we get a look at the terms.

Meanwhile, remember something I’ve told you repeatedly so that you can prepare for the next pullback AND have a smile on your face, too…

If you are not investing while the chips are down, you will not be ahead of the game when they're up.

Here’s my playbook.

1 – Nadella’s in your face power flex

Microsoft’s earning call was a Masterclass in world-class execution.

Q4 Results (Read):

Revenue: $76.44B (beat)

EPS: $3.65 (beat)

Net income: $27.2B, up from $22B YoY

Azure: $75B in annual revenue, up 34%

Azure Q4 growth: +39% — an absolute monster

Only it’s NOT the real story.

Microsoft revealed the dollar value of Azure for the first time ever… $75B+ in revenue.

With a “B”.

YoY growth of 34%.

To be clear, they didn’t have to — they wanted to because the numbers are finally strong enough to be a full-on, in your face flex.

Azure’s strength isn’t about cloud anymore — it’s about AI, exactly as I suggested would be the case when I first heard about it.

Microsoft is building a productivity machine powered by artificial intelligence — and it’s already rewriting the company’s entire business model.

Case in point, CEO Satya Nadella says 30% of Microsoft’s internal code is now AI-generated, all of which produce a trifecta of investing multipliers you’ve heard me mention many times over: margin expansion, time compression, and return to scale. I expect it to be 50% within a few years, and that’s probably conservative.

I cannot understate how important this concept is to your investing.

Traditional rules collapse when AI starts building AI. Revenue increases. Expenses fall. Speed rises. Entire product cycles compress from quarters to weeks.

That’s not theory — it’s happening right now.

Unbelievably, I still see so many folks grousing about “when AI is going to monetize” and can’t help but shake my head.

The answer is increasingly undeniably right flipping now.

To be clear, I don’t hold it against ‘em, change is uncomfortable. But I do feel bad for ‘em for the simple reason that anybody who is not on-board risks missing everything, not just missing out.

AI will go down as the greatest investing theme in recorded human history, a statement I have made repeatedly over the years including during major network appearances like this one with the super-savvy Kelly Evans. (Watch)

If you have this covered, great! If not – and a lot of folks don’t - I'll be here.

2 – Powell’s nothing sandwich

I can’t say I’m surprised.

Fed Chair Jerome “It’s Transitory” Powell decided to leave rates unchanged.

Talk about a nothing sandwich.

The Fed is a sideshow at this point, imho.

3 – I told you META would be the fireworks

The venerable Stuart Varney asked me ahead of Monday's opening bell which big tech earnings of those reporting this week would get the biggest reaction.

Meta, I said in no uncertain terms. (Watch)

Looks like I was on the money – pun absolutely intended – and no, I still don’t own it doggonit but my hat is off to everyone who does.

Is it time to give Meta another look?

Maybe.

I still prefer the back-door approach for now that I’ve shared with the One Bar Ahead® Family but I am delighted to give credit where it’s due.

This was a strong quarter, from a company that’s starting to act like it wants a seat at the grown-up table.

Keith’s Investing Tip: It’d be easy to feel regret - and a lot of folks do in a situation like this - but I’ve found that’s not very useful in the scheme of things over the years. Investing isn’t a competition. You can’t own every great stock that tickles your fancy. Long term success comes to finding, buying and owning great stocks that meet YOUR goals, YOUR objectives, and YOUR situation. META simply hasn’t met mine… yet (but I have a sneaking suspicion that day is coming). 🤷🏻‍

4 – Waymo’s got a Tesla problem

Waymo's been cruising slowly with regulators and robotaxis in limited geofences.

Now Tesla’s dropping the clutch.

Elon’s rolling out robotaxi service in Austin this year, with plans to hit 25 cities within 12 months.

No Lidar.

No geofence.

Full send.

Keith’s Investing Tip: First mover wins. But fast movers dominate. If you can find both in one company… and, yes, it’s a very short list.

Trade idea: Consider buying the rumor, then trailing a stop. Or short legacy automakers still stuck in first gear. I’d buy putskies on Waymo if I could but it’s still private (owned by Google), darn it. At the same time, I think this’ll pressure Uber and Lyft… probably more Uber if my gut check is correct.

5 – CVS just pulled a hat trick

CVS shares are jumping this morning on the heels of a double — meaning a top and bottom-line beat. (Read)

Strong guidance helps, of course. The company now expects $6.30–$6.40 in adjusted earnings per share for the year, up from $6.00–$6.20. That’s no small bump.

That’s a hat trick.

Should you buy it?

That depends on how you see the company’s future.

I think there are bigger fish to fry, personally.

Pharmacies are going to get reinvented and in the next few years… along with our entire health care system and I am hard pressed to see any massive game-changing opportunity here at the moment.