What I bought this week in my Stocks and Shares ISA

I only made one move in my Stocks and Shares ISA this week. But itâs one Iâm extremely excited about.

Thereâs a stock that I probably should have bought a long time ago, but didnât. And I finally got â and took â the opportunity to put that right.

Background: overthinking

One of Warren Buffettâs great insights into investing is that there arenât any points for difficulty. Whether a company is easy to understand or complicated, famous, or obscure, doesnât matter.Â

Ultimately, there are only two things that matter. The first is how much cash the business is going to produce over time and the second is how much an investor pays to own part of it.

Sometimes, the best stocks to buy are under-the-radar names that are hard to find. But this isnât always the case and Iâve definitely overlooked some opportunities hiding in plain sight in the past.

Fortunately for me, I saw a chance to go some way towards putting that right this week. And thatâs why Iâve added a new name to my Stocks and Shares ISA.

What Iâve bought

The stock is Microsoft (NASDAQ:MSFT). Pretty much everyone knows what the company is and what it does, but that hasnât stopped it from being an outstanding investment in the past.

As I write this, the stock is down 1.76% from where it was 12 months ago. But there have been plenty of opportunities to buy it below its current price in the last five years.

I think, though, that now is a rare chance. In the last five years, the stock hasnât traded at a lower price-to-book (P/B) ratio and its price-to-earnings (P/E) ratio has been lower once â briefly â in 2022.

Investors who bought the stock back then are currently up 70% on their investment, compared to a 57% gain for the S&P 500. And Iâm hoping for similar success from this point forward.

Outlook

Thereâs a reason Microsoft shares are cheap right now. The stock market is worried about artificial intelligence (AI) and the firm is right in the middle of everything thatâs concerning investors.

The company has committed to investing $150bn in AI infrastructure this year and thereâs a risk this might not pay off. And AI could generate new competitors for its software products.

Microsoft, however, has its own AI product â Copilot. And with Office having a huge market share, creating a meaningful challenger that can convince customers to switch would be extremely hard.

The big investments are also designed to strengthen this position. Building out data centres that power its AI products gives the firm an integration advantage few competitors can match.

Better late than never?

I probably should have bought Microsoft shares a long time ago. But I struggled to see how a stock thatâs so well-covered by analysts could possibly be a bargain (outside a market crash).

Fortunately, Iâve had a chance to put that right this week. And Iâm pleased that I managed to be patient and wait for my opportunity, rather than forcing it at a P/E ratio of 38.

Iâm more mindful of Warren Buffettâs advice about not making things unnecessarily complicated than I once was. But with Microsoft, I think itâll be a case of better late than never.

The post What I bought this week in my Stocks and Shares ISA appeared first on The Motley Fool UK.

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Stephen Wright has positions in Microsoft. The Motley Fool UK has recommended Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.