Why Intelligent Investors Are Buying Microsoft Stock on the Dip Right Now

The recent 10% decline in Microsoft (NASDAQ: MSFT) shares caught many off guard. After the company delivered solid fiscal 2026 second-quarter earnings results (period ending December 31), the stock pulled back despite beating expectations on multiple fronts. However, this dip presents a rare and compelling buying opportunity that savvy investors shouldn’t ignore. The market’s reaction appears disconnected from the company’s fundamental strength and growth trajectory. While Microsoft has generated an 85.5% five-year return—barely underperforming the S&P 500’s 87% gain—the current pullback has created an attractive entry point for long-term investors.

Azure’s Exceptional Growth Is Outpacing Expectations—Even After the Dip

Microsoft’s cloud computing division, Azure, remains the primary driver of investor confidence and stock appreciation. This segment has been instrumental in fueling the company’s impressive performance over the past several years, and there’s no sign of momentum slowing down.

During the recent quarterly report, Azure delivered outstanding results with 39% year-over-year revenue growth. Management had guided investors to expect 37% expansion, making this result a clear beat. What’s particularly noteworthy is that this outperformance extended across multiple business units—two of Microsoft’s three major divisions topped internal expectations. Yet despite these positive surprises, the market punished the stock anyway.

This disconnect is a classic example of irrational market behavior. When a company consistently hits or exceeds its own guidance, the stock should be rewarded, not penalized. Azure’s dominance in cloud services is particularly valuable because enterprises increasingly rely on it to access computing power for training and deploying artificial intelligence models. As the AI race intensifies, Azure stands to benefit enormously. The current dip, therefore, represents a chance to invest in a segment with enormous growth runway at a depressed price.

Your Gateway to OpenAI’s Potential Returns Through Microsoft

Beyond Azure, Microsoft has positioned itself as a unique beneficiary of the generative AI boom through its substantial stake in OpenAI. The company holds approximately 27% of OpenAI, giving it meaningful exposure to one of the most transformative AI platforms available.

While Azure offers access to various generative AI models on its platform, Microsoft strategically encourages users toward ChatGPT, the flagship product from OpenAI. This positioning ensures that Microsoft benefits whenever enterprises choose ChatGPT for their AI needs. What makes this particularly exciting is the recurring speculation about OpenAI’s potential initial public offering later in 2026. Should that transaction materialize, Microsoft could have the opportunity to partially exit its investment at an optimal time and substantial valuation.

Currently, Microsoft represents the primary publicly listed way for individual investors to gain exposure to OpenAI’s extraordinary growth potential. This indirect ownership has already proven valuable and could become even more significant as OpenAI’s prominence grows.

Valuation Has Rarely Been This Attractive—a True Dip Opportunity

Following the market pullback, Microsoft’s valuation has reached levels not commonly seen in recent years. The stock now trades at approximately 26 times forward earnings, representing a significant discount to its typical premium valuation. Over the past three years, reaching this valuation level has been rare.

Microsoft rightfully commanded its previous premium multiple due to excellent operational execution combined with accelerating growth prospects. Critically, none of the company’s underlying fundamentals changed during the earnings release that triggered the recent decline. The company didn’t issue disappointing guidance, miss expectations, or reveal structural problems. The stock dropped 10% purely due to market sentiment and unrealistic expectations.

This creates an obvious opportunity. When a world-class company maintaining its operational excellence trades at a discount to historical norms, rational investors should act. Azure’s remaining $625 billion in performance obligations provides enormous visibility into future revenue streams. Since the AI competition remains in early innings, Microsoft has substantial room to grow and monetize these commitments over the coming years. The dip offers investors a chance to own this growth engine at a price that may not return again soon.

The Verdict: This Dip Is Worth Acting On

Microsoft’s recent stock price decline appears disconnected from the company’s strong fundamentals, industry positioning, and future growth potential. The combination of Azure’s accelerating revenue growth, strategic access to OpenAI’s development, and a compelling valuation creates a compelling case for investment.

While market timing remains notoriously difficult, this dip represents the type of rare opportunity that occurs when quality meets value. The company’s track record, the strength of its cloud business, and the long-term secular trends supporting both Azure and AI adoption make now an excellent moment to establish or add to positions in Microsoft stock.