Microsoft Stock Hits a Buying Dip—Here's Why Now Is Your Moment

The recent pullback in Microsoft shares presents a compelling case for investors considering an entry point. While the stock has struggled following the company’s fiscal 2026 second-quarter earnings release (ending December 31), the underlying fundamentals tell a different story than what the market’s reaction might suggest. After climbing over 85% in the past five years, Microsoft’s current valuation offers a rare opportunity to accumulate shares at more reasonable levels.

Why Azure’s Growth Makes This Dip an Attractive Entry Point

The heartbeat of Microsoft’s investment thesis remains its cloud computing division, Azure. This business segment has been the primary driver of shareholder returns over the past several years, and there’s no sign of that momentum slowing down.

Azure is benefiting significantly from the ongoing AI revolution. Enterprise clients are leveraging the platform to access the computing power necessary to build and deploy sophisticated AI models. In the most recent quarter, Azure delivered remarkable results—revenue climbed nearly 40% year over year. This represents an acceleration beyond what management had guided investors to expect for the fiscal third quarter, suggesting the company is executing at a level that even its leaders didn’t fully anticipate.

What makes this particularly significant is that two of Microsoft’s three major business divisions exceeded expectations during the earnings report. Yet despite hitting its targets and demonstrating strong operational momentum, the stock declined approximately 10% following the announcement. This disconnect between operational outperformance and market sentiment is a classic signal that investor expectations may be misaligned with reality. When a company executes flawlessly but the market still punishes the stock, seasoned investors often recognize this as a moment to initiate or add positions.

The OpenAI Upside You Might Be Missing

Beyond its direct cloud services, Microsoft holds a significant stake in OpenAI—approximately 27% of the business. This positioning provides Microsoft with indirect exposure to one of the most important AI developments of our time. While Azure enables various generative AI models, Microsoft clearly benefits most when enterprise customers choose OpenAI’s ChatGPT for their applications.

The value of this investment could accelerate meaningfully if OpenAI proceeds with its rumored initial public offering later this year. An IPO would not only validate the company’s valuation but could also provide Microsoft with opportunities to optimize its ownership position. Whether through partial liquidity events or retained holdings in a now-public entity, Microsoft’s stake represents a valuable optionality that many investors overlook when evaluating the stock’s total return potential.

Valuation Tells the Real Story of Microsoft’s Correction

Following the recent pullback, Microsoft’s valuation has become more accessible. The stock now trades at less than 26 times forward earnings—a level rarely seen in the past three years. For context, this represents a meaningful discount to the premium multiples the company commanded when growth was expected to be more explosive.

The critical point here is that nothing fundamental has changed about Microsoft’s business. The company maintains top-tier execution capability and continues to operate within a secular growth trend driven by AI and cloud adoption. The 27% forward growth guidance for Azure demonstrates that the company’s trajectory remains intact. Microsoft’s remaining performance obligations—commitments from enterprise customers totaling $625 billion in its Azure business alone—virtually guarantee substantial revenue recognition over multiple years. With the AI competitive race far from reaching maturity, Microsoft possesses enormous runway for continued expansion.

The disconnect between valuation compression and operational consistency creates what disciplined investors recognize as a dip worth buying. The stock rarely trades at these multiples, and when it does, history suggests it represents an entry point rather than a warning sign.

Is This Really the Time to Buy Microsoft’s Dip?

The simple answer is yes, but with appropriate context. Microsoft has earned its historical premium valuation through consistent execution and growth that outpaces most peers. Following the recent earnings release, none of that thesis has deteriorated. What changed is the market’s tolerance for the stock’s valuation—not the company’s ability to deliver results.

For investors seeking exposure to the secular themes of AI, cloud computing, and digital transformation, Microsoft’s current dip offers a window of opportunity that may not persist for long. The combination of Azure’s accelerating revenue growth, the OpenAI investment optionality, and the newly accessible valuation creates a multi-dimensional case for buying.

This is precisely the type of moment that distinguishes patient investors from reactive traders. Microsoft’s dip is presenting what may be a fleeting opportunity to own one of the most strategically positioned companies in technology at a more reasonable entry point. Those with conviction in the company’s long-term trajectory would be wise to consider using this market weakness to their advantage.