Microsoft (MSFT) and Alamos Gold (AGI) Report
We have a few material updates on our second-best-performing position, Microsoft (MSFT). The stock is up about 95% (105% including dividends) since we jumped on board in February 2023. That performance puts MSFT more than 30% ahead of the S&P 500 Index over the same time frame.
First, on Tuesday Microsoft posted details on its evolving relationship with OpenAI that seems to strike reasonable compromises. Persistent murkiness around this relationship has likely kept shares of MSFT from performing as well as they could have if there was more clarity, so at a high level this is good.
The very, very short version is that Microsoft’s intellectual property rights for products and models with OpenAI are extended through 2032 (i.e. seven years) and now include models post-AGI (Artificial General Intelligence, which means AI that can do any intellectual task a human can do without task-specific training).
The previous arrangement stipulated that IP rights would have ended once OpenAI achieved AGI, even if it were to happen tomorrow. So this is significantly better and means Microsoft’s Copilot and Azure products can continue to advance in concert with advances in OpenAI tech.
OpenAI has also made a $250 billion commitment to purchase Azure cloud services. This should help assuage concerns about OpenAI and Oracle (ORCL) getting too cozy. Microsoft’s 32.5% stake in OpenAI now drops to 27% due to recent funding rounds.
Moving on to yesterday’s fiscal Q1 2026 results, Microsoft’s revenue grew by 18% to $77.67 billion while adjusted EPS grew by 25% to $4.13. Both figures beat expectations. Guidance for Q2 essentially matched expectations but was a little low for the mega-bulls that expected Azure growth to continue at a 40%+ rate (it was 39% in the quarter).
Azure continues to face capacity constraints, which is why Microsoft plans to more than double its data center capacity by 2027.
This remains one of the best ways to gain exposure to AI. MSFT may not be as splashy as some other stocks, but it should continue to be a low-stress way to participate in the trend and likely beat the broad market over time too. BUY
Alamos Gold (AGI)
Shares of Alamos Gold (AGI) are trading lower today, despite a rise in the price of gold, after the company reported a Q3 revenue miss. The culprits were one week of unplanned downtime (broken equipment) at the Magino mill at the end of September and an underground seismic event (which cut off an escape way, a critical safety precaution) in October at Island Gold. This event also led to lower-grade gold production since the higher-grade gold wasn’t accessible. The bottom line: total production guidance for the year (just one quarter left) was cut by about 6%.
This is a little frustrating but what are you going to do? Mining is operations, and things don’t always go smoothly. Alamos is typically a very, very consistent performer and these relatively minor issues are uncharacteristic, but don’t change the big-picture story.
Back to details … sales of $462.3 million were 5.1% below expectations. But adjusted EPS of $0.37 beat by a penny. Gold production was 141,700 ounces and gold sold was 136,473 ounces.
Guidance for the rest of the year was lowered by 6%, most of which is because of what just happened in Q3. Management said gold production should be 560,000 – 580,000 ounces (prior guidance was 580,000 – 630,000 ounces) at all-in sustaining costs that met prior guidance ($1,400 - $1,450 per ounce). They pulled back on investments by about $60,000 to a range of $500,000 - $560,000.
On to Q4, and 2026. BUY
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