Jacob Andreou: “Microsoft (MSFT) Needs to Lift Its Game and Execute Better to Clear the Higher Bar”

3 weeks ago 8

Soumya Eswaran

Mon, July 20, 2026 astatine 7:57 AM CDT 4 min read

L1 Capital, an concern absorption firm, released its "L1 Capital International Fund" (unhedged) second-quarter 2026 capitalist letter. A transcript of the missive tin beryllium downloaded here. The missive discusses the existent concern situation arsenic a 'two-speed' but resilient planetary economy, accompanied by an uncertain future. The missive explores the imaginable of an AI bubble, distinguishing betwixt beardown fundamentals and speculative momentum. Additionally, the marketplace displays a 'narrow' character, marked by precocious exuberance and pronounced over-pessimism. Against this backdrop, the Fund returned +2.6% (net of fees) during the June 2026 quarter, compared to the benchmark instrumentality of +12.5% (all successful A$). The underperformance was driven much by which investments were not held successful the Fund than by which investments were held successful the Fund. The Fund remains focused connected quality, valuation and the avoidance of imperishable superior loss, and believes the portfolio is positioned to present charismatic risk-adjusted returns for diligent investors. In addition, you tin cheque the Fund's apical 5 holdings to cognize its champion picks successful 2026.

In its Q2 2026 capitalist letter, L1 Capital International Fund highlighted Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is simply a multinational bundle institution that develops and supports software, services, devices, and solutions, holding ascendant positions successful software, unreality infrastructure, generative AI, and gaming. On July 17, 2026, Microsoft Corporation (NASDAQ:MSFT) closed astatine $393.82 per share. One-month instrumentality of Microsoft Corporation (NASDAQ:MSFT) was 7.21%, and its shares mislaid 22.79% implicit the past 52 weeks. Microsoft Corporation (NASDAQ:MSFT) has a marketplace capitalization of $2.93 trillion.

L1 Capital International Fund stated the pursuing regarding Microsoft Corporation (NASDAQ:MSFT) successful its Q2 2026 capitalist update:

"Particularly attentive semipermanent followers of the Fund whitethorn person noticed that Microsoft Corporation (NASDAQ:MSFT) is nary longer among the apical 10 holdings. We person rebalanced the portfolio weights betwixt Alphabet and Microsoft. We stay comfy with the Azure hyperscaler concern of Microsoft, though we judge the concern whitethorn beryllium little good positioned compared to Alphabet's GCP and Amazon's AWS hyperscaler businesses:

• Microsoft is down successful processing its ain chips (GPUs, CPUs, ASICs) to enactment AI workloads astatine little outgo and trim reliance connected Nvidia. • Previously, Azure pulled backmost connected immoderate information centre investments and is present capableness constrained and much babelike connected neocloud capableness for contiguous needs. • Azure is much OpenAI-centric and little Anthropic-centric, and precocious Anthropic has been out-executing OpenAI. Azure does not conscionable service OpenAI and is simply a trusted spouse of galore of the largest organisations globally. We expect Azure to present beardown growth, and dependable returns connected its monolithic superior expenditure.

Microsoft is, of course, considerably much than Azure. Some businesses operated by Microsoft, specified arsenic Xbox, are struggling, portion others specified arsenic the Windows operating strategy franchise look cyclical challenges. Microsoft 365 remains of captious value to the Microsoft concern lawsuit and valuation, peculiarly the ongoing improvement of Copilot. Management changes person been made to amended performance. The caller concern head, Jacob Andreou, summarised the concern good successful the highlighted quote. Microsoft needs to assistance its crippled and execute amended to wide the higher bar."

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