TIP813: MICROSOFT (MSFT): IS MICROSOFT A MISUNDERSTOOD AI OPPORTUNITY?

W/ DANIEL MAHNCKE & SHAWN O’MALLEY

TIP813: MICROSOFT (MSFT): IS MICROSOFT A MISUNDERSTOOD AI OPPORTUNITY? W/ DANIEL MAHNCKE & SHAWN O’MALLEY

06 May 2026

Daniel Mahncke and Shawn O’Malley take a deep dive into Microsoft — the $3 trillion incumbent whose entire investment thesis now hinges on two of the most contested questions in technology: whether AI will reinforce or quietly dismantle the software franchises that built the company, and whether the OpenAI partnership is the strategic masterstroke it appeared to be in 2023, or a relationship that is slowly turning from asset into liability.

Some investors believe Microsoft is uniquely positioned to weather — and profit from — the AI transition, with Azure capturing the infrastructure layer, Copilot embedding AI into the workflows of hundreds of millions of Office users, and a distribution machine no startup can replicate. In their view, the OpenAI partnership remains a crown jewel: privileged access to frontier models, a revenue share on one of the fastest-growing companies in history, and a hedge against any single lab pulling decisively ahead. Others see a far more uncomfortable picture. Office, Excel, and PowerPoint look exactly like the kind of legacy interfaces that generative AI is built to disintermediate.

Join Daniel Mahncke and Shawn O’Malley as they work through whether Microsoft’s software moats can survive the very technology Microsoft is helping to build, examine what the OpenAI partnership actually looks like in 2026 versus the story sold to investors three years ago, and assess whether one of the most widely owned stocks in the world still deserves a spot in The Intrinsic Value Portfolio.

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IN THIS EPISODE, YOU’LL LEARN:

  • About all major business units
  • How LinkedIn’s business works
  • Why the Office products might be in danger
  • How the cloud business keeps growing
  • What the future plans for gaming are
  • How AI is challenging Microsoft’s software
  • Who captures the most value from AI
  • Whether Shawn and Daniel add MSFT to the Intrinsic Value Portfolio
  • And much, much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Daniel Mahncke: Microsoft is without a doubt still one of the highest mode businesses in the world, but I would still say that it’s in a very critical transition phase that it has to nail now.

[00:00:13] Shawn O’Malley: You’re not used to seeing the market doubt Microsoft the way it currently is. Usually this is one of the most stable mag seven companies out there.

[00:00:24] Daniel Mahncke: But that’s also why it might be a rare opportunity to buy Microsoft at historically low multiples today. So we did that with Google, and it was our most successful investment last year. And today we will see if Microsoft can become our most successful investment this year.

[00:00:41] Intro: Since 2014, with more than 200 million downloads. We have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investments in the securities discussed. Now for your host, Shawn O’Malley and Daniel Mahncke.

[00:01:27] Shawn O’Malley: For long term investors, the current market in some ways might look like a gift because you have some great companies that have sold off to attractive prices. And today we are talking about a company that has dominated the last thirty years of American tech like few others. And despite what have looked like very solid numbers from this company in the last quarter, the stock sold off thirty five percent in the last six months. So that’s exactly what I’m talking about. And that means Microsoft, the company of interest today, is now trading at a forward PE of just 20 times earnings.

[00:02:05] Daniel Mahncke: And mind you that just six months ago, investors were still willing to pay 40 times earnings for this company. And it’s even more interesting if you compare how Google and Microsoft have performed since ChatGPT came out, because I still remember that ChatGPT was supposed to be the end of Google and Microsoft, through owning a stake in OpenAI, was kind of seen as the big AI winner among the mag seven. And then now fast forward a little more than three years, and Google is up 200 percent, and Microsoft is kind of trailing Google significantly.

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