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Microsoft Hold
Damodaran's decision to maintain his Microsoft position through the AI volatility of 2024-2026, on the reasoning that the cloud business is "a utility essential to modern life" whose value does not depend on AI speculation.
The Microsoft hold is the symmetric counterpart to the Nvidia sale in Damodaran's 2025-2026 portfolio actions. While he sold Nvidia at prices that required nearly impossible outcomes to justify, he maintained his Microsoft position throughout the same period. His reasoning: Microsoft's value derives substantially from Azure, the cloud business that has become "a utility essential to modern life," whose growth and margins do not depend on optimistic AI assumptions. The narrative-to-numbers translation for Microsoft produced an intrinsic value that supported the market price even before incorporating any AI upside. AI represented option value, not core value. He held.
In The You On AI Field Guide
The hold illustrates a principle Damodaran has emphasized throughout his career: the best investments are often the ones whose intrinsic value derives from durable competitive advantages whose continuation does not require speculative future events. Microsoft's cloud business has the characteristics of utility — necessary for modern enterprise operation, switched-cost-protected, growing at rates the addressable market