Weekly "Focus" and Mister Softee

Lately, it seems there is a daily announcement related to the advancement of artificial intelligence (AI). Data centres are being built around the world at a furious pace to speed the development of AI applications. Microsoft* will no doubt be a major player in the future of AI via its investment in Open AI and through the extension of its existing suite of software used by approximately 1 billion people around the world (ii).

 

It didn’t take long for BMO to introduce us to Microsoft Co-Pilot, an AI application, on our work computers. One of the most interesting aspects of this application is that it allows us to generate discussion summaries when we meet using the Microsoft Teams video calls (we will ask your permission). The summaries are concise and provide next steps. So far, we’ve tested it a few times and the summaries are amazing but do need a bit of clean-up before being circulated.

 

Microsoft is currently the second largest company in the US by market value at US$3.8 trillion, only trailing behind Nvidia who has crossed the US$4 trillion threshold (i). The company reports quarterly earnings next week on July 30^th, and we will see if the shares can build on the 22% gain so far in 2025 (i). Keith Bachman is the BMO Capital Markets analyst covering the company:

 

We rate MSFT shares Outperform. We believe that MSFT's valuation is reasonable on a P/E basis, but not inexpensive. We think AI can help support longer-term growth, and we think the durable growth opportunities warrant a premium valuation.

 

The stock symbol of Microsoft is MSFT, and traders playfully refer to it as “Mister Softee”. Treat yourself to some ice-cream soon and enjoy the beautiful hot summer weather!

 

This week’s "Focus" from our economics team is attached.

 

Also, please note that I am out of the office next week so our Weekly “Focus” will return on Friday , August 8^th.

 

Have a great weekend,

 

Brad

Senior Portfolio Manager and Senior Investment Advisor