L1 Capital says Microsoft valuation now matches AI fundamentals
L1 Capital’s International Fund posted a 3.5% net return in Q3 2026, beating its benchmark’s 1.5% gain. In its investor letter the fund highlighted Microsoft Corporation, whose shares closed at $531.87 on Oct. 20, giving the company a market value of $3.95 trillion. Microsoft contributed more than 0.5 percentage points to the fund’s performance and posted a one‑month return of 6.25% and a 2.18%…
Key points
- Microsoft 365 Copilot reached 30 million paid seats, with net additions more than doubling quarter‑on‑quarter.
- Azure’s cloud and AI infrastructure is viewed as key to generating returns on hundreds of billions in capex.
- Microsoft’s share price rose 38 % in September, but L1 Capital says valuation now aligns with fundamentals.
The letter points to two AI‑related developments. First, Microsoft 365 Copilot’s paid seats reached 30 million, with net seat additions more than doubling quarter‑on‑quarter, and its capabilities have improved markedly. Second, Azure’s cloud and AI infrastructure platform is seen as crucial for turning hundreds of billions of dollars of capex into attractive returns, while the company broadens its product offering and reduces reliance on OpenAI. Microsoft’s share price rose 38% during the September quarter, but L1 Capital believes the current price now reflects the firm’s underlying AI fundamentals after a period of excessive pessimism.
The story so far
4 episodes →- L1 Capital says Microsoft valuation now matches AI fundamentalsthis story
Market Re-Rating Aligns Microsoft Corporation’s (MSFT) Valuation with Core AI Fundamentals
finance.yahoo.com · 21 October 2026
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This text was published by finance.yahoo.com and written by Soumya Eswaran. It is reproduced here with attribution so you can read it in full; the rights remain with the publisher. Read it at the source ↗
Coverage and discussion
2sources- Jim Cramer and Ken Fisher’s AI Pick: Microsoft (MSFT)Press · finance.yahoo.com ·
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