BROKERS’ NOTES: Buy Microsoft, sell Docusign

Byron Lotter, investment analyst at Vestact

Buy: Microsoft

Microsoft is down 24% from its highs in October, for two reasons. First, the market fears that AI will commoditise traditional software and erode parts of Microsoft’s core business. Second, investors are concerned that the company is spending too aggressively on data centres and AI infrastructure, which could pressure margins in the near term. We think this view is contradictory. AI is seen as a threat to Microsoft’s software, yet the company is criticised for investing heavily in the same technology. In reality, AI is likely to strengthen Microsoft’s ecosystem. Products such as Excel, Word, Teams and Outlook have a loyal and entrenched client base. AI enhancements should make these tools even more valuable. At the same time, demand for Azure continues to grow as companies build AI applications, supported by Microsoft’s strong position in OpenAI. We see the current weakness as a great opportunity to add to Microsoft.

Sell: Docusign

Software companies with fickle customers and easily replicated services are in trouble. Docusign ticks both those boxes. If a company is a service provider managing contracts for many clients, there is little preventing those clients from building a simple in-house alternative. With modern AI tools, creating a functional e-signature and workflow system is relatively straightforward and inexpensive. Switching new contracts to an internal solution could materially reduce costs, especially at scale. That creates a serious risk. When customers can replicate your product with limited effort and minimal switching friction, pricing power quickly erodes. Docusign’s share price has been pummelled. The share was trading at $93.83 in mid-2025 and has halved since then. In the first two months of 2026, it has plunged from about $65 to around $45. If you haven’t sold Docusign already, get out now … before it’s too late.

Lotter is an investment analyst at Vestact