MSFT

Microsoft

The default operating layer of white-collar work — identity, cloud, and the desktop, sold as one system.

FortressForeverFullTech fluentBerkshire overlap

Longhold

Earnings

Moat

Hold

Ten-year thesis

A ten-year hold is a bet that enterprises still run on Microsoft identity, Office, Azure, and GitHub — and that AI is an attach rate on that install base, not a new company. Switching costs stack: Entra, 365 seats, Azure commitments, GitHub, and Windows. Capital intensity is rising with AI datacenters, but cash conversion remains elite and the balance sheet can fund the cycle. This is what a tech fortress looks like when you score it as an owner, not as a gadget cycle.

The moat

Distribution plus switching costs. Once a company is on Entra + 365, ripping it out is a multi-year operational event. Azure is not always the technical winner; it is often the political winner. GitHub owns the social graph of code. That combination is closer to a railroad than to a consumer app.

Switching costs94

Pain, risk, or retraining required to leave.

Network effects78

The product gets better as more people use it.

Intangibles & IP90

Patents, data, licenses, process knowledge, regulation.

Scale advantage93

Fixed costs spread over a volume rivals cannot match.

Cost advantage72

Structural ability to be the low-cost producer.

Brand88

Pricing power from trust, habit, or identity.

Tech overlay

Buffett avoided software because he could not underwrite the product cycle. The product cycle here is slow. Cloud and productivity are utilities with 90%+ retention. Treat Copilot as optionality on a tollbooth you already own, not as the thesis.

What can break it

AI capex that never earns its cost of capital
Antitrust remedies around bundling and Office
Open-source and specialist clouds nibble Azure share

Earnings path

USD billions, illustrative 2016–2025 series

Owner metrics

P/E

34.0×

P/FCF

32.0×

ROIC

29%

ROE

36%

FCF conversion

94%

Debt / equity

0.32

Gross margin

69%

Op. margin

45%

10y rev CAGR

13%

10y EPS CAGR

16%

Owner earnings

$78.0B

Mkt cap

$3.18T

Owner earnings yield 2.5%. Yield is judged against quality, not against a single hurdle — a fortress can be fairly priced at a lower yield than a fragile name.

CloudIdentityDeveloperBerkshire