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☕️ Microsoft: if this doesn’t catch your attention, you’re not paying attention.

Apr 30, 2025

Howdy! 👋

And just like that, the markets are heading lower as computers race to the bottom on the heels of disappointing trade policy. Or so say the headlines. (Read)

Not true.

We know better.

The markets are heading lower because traders have decided that the negative growth figure might actually push Unka Powell to lower interest rates at a time when their badly broken models give policy wonks a bad case of indigestion.

There are two things the markets don’t like above all else… uncertainty and a lack of confidence.

Both are an opportunity.

Your best defense on days like this and at times like the present in event-driven markets is a strong offense, especially when it includes big dividends, built in margin protection, low-beta and consumers who still flock to it in droves.

People who don’t think this is a big deal are kidding themselves. Case in point, two OBA faves meeting the criteria I’ve just described – are still net positive YTD despite it all. Moreover, they’re growing like crazy.

Hopefully you own something similar or, if not, plan to do something about it.

No investor should ever fear a decline if they’ve got their bases covered.

Btw, and if you’d like some help doing that – the whole bases covering thing including detailed information on both of the stocks I’ve just mentioned – the May issue of One Bar Ahead® comes out this Friday.

Meanwhile…

Here’s my playbook.

1 – Data gives the doom squad reason to sell

The US economy shrank by -0.3% in Q1. (Read)

Are you surprised?

I mean really, honestly.

I’m not and you shouldn’t be.

Uncertainty weighs on everything all at once.

Keith’s Investing Tip: Government data is like constantly looking in the rear-view mirror. The markets are forward-looking, which when you think about it is why everybody is always talking about the next big thing. And buying using simple, proven tactics to get the job done.

2 – What to do with your money now

People are tempted to make what’s happening political.

Do yourself a favour, it’s not.

The markets have a very defined upside bias over time no matter who is in charge.

Don’t believe me – I get that a lot.

I do money not politics and here’s what the money has to say about what I’ve just said… and boy is that a mouthful! 🤦️

Meanwhile, here’s a wide-ranging discussion about money, the markets and how to think about the data with my good friend and colleague, Scott “the Cow Guy” Shellady. (Watch)

3 – Microsoft: if this doesn’t catch your attention, you’re not paying attention

I’ve been telling investors for years that AI is going to rapidly impact our world especially when it learns to create other AI at which point what I call the “multiplier effect” rises to the top.

Every business on the planet will adapt, adopt or die.

Companies that get it right will see a massive jump in profit margins as expenses associated with scores of very talented – albeit very costly - Celsius swilling, pizza consuming programmers drop like a rock or get redeployed.

I think we’re very close now.

Why?

CEO Satya Nadella said that up to 30% of the code in Microsoft’s repositories is now written by artificial intelligence, with that number climbing steadily. (Read)

This is the holy grail of operational leverage and profit potential!

Microsoft isn’t just cutting expenses like most will think.

What this means that Microsoft is building an AI-driven productivity engine that could accelerate feature deployment, ship products faster, and create entirely new services at a fraction of historical R&D costs.

Microsoft reports later today (Read)

I can’t wait.

And do some some more shopping. 🛒

4 – Starbucks: so much for the grande-size turnaround

Starbucks just served up its 5th straight quarter of declining same-store sales while also missing both top and bottom-line estimates. Again. (Read)

So much for that grande-sized turnaround Wall Street’s been sipping on.

Management’s latest move?

Scaling back its automation push and pouring more money into labor.

Call me crazy but a barista who can spell your name correctly won’t save Starbucks from shrinking margins and bloated expectations when customers stop forking over $10 a cup for flavored water.

Not for nothing and on a related note, I recently popped into a Starbucks while running some errands with my bride and was served up what had to have been the worse coffee I’ve ever tasted by two employees who made me feel like I was interrupting their day.

No thanks… ever again.

Putskies, short and avoid.

5 – Not all tech is the same

Super Micro shares got smacked Tuesday — down as much as 19% — after the company dropped a reality check in the form of preliminary Q3 results that fell well short of the hype. (Read)

Adjusted earnings?

Just $0.29 to $0.31 per share, versus the $0.54 Wall Street was expecting.

Revenue?

$4.5 to $4.6 billion, also miles below the $5.5 billion consensus.

The company blamed “delayed customer platform decisions” and “higher inventory reserves” tied to older products.

Translation?

Management thought the deals were done, but they weren’t. And the company is sitting on too much outdated gear while waiting for customers to greenlight deals on next-gen stuff.

Buzzword bingo is not a management strategy, nor investable imho.

I’m tempted to short the stock, but Wall Street has a vested interest in defending it because legions of folks fancy trading it… which means there’s volume… and yep, big fat commissions on the table for the taking.

Buffett said, “The stock market is a device for transferring money from the impatient to the patient”, to which I add “and profit worthy.”