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Microsoft’s shares have gained more than 14% since April began, but the company remains down over 20% from its all-time high reached in October 2025. With inflation and geopolitical tensions among the potential headwinds, the near-term direction of the stock is uncertain. For long-term investors, the article argues there are three reasons to consider buying the dip.
Some investors worry that artificial intelligence could replace software services, including those offered by Microsoft. The article compares this concern to earlier fears about Alphabet, when investors expected AI chatbots to disrupt Google’s search business, a major source of revenue driven by search-related advertising.
According to the article, those fears did not materialize as expected. Instead, Alphabet adapted by incorporating AI into its search capabilities, and the technology ultimately improved the business. While the situations are not identical, the article contends that Microsoft’s culture of innovation and established enterprise relationships could help it respond to AI-driven change.
It points to Microsoft’s Copilot, an AI assistant integrated across its productivity suite, as evidence that the company is already updating its offerings. The article’s view is that Microsoft will be able to manage the AI threat effectively.
Investors concerned about inflation or recession are directed to Microsoft’s revenue structure. The article notes that a significant portion of Microsoft’s revenue comes from subscriptions, including offerings to individuals, businesses of all sizes, and government or non-profit institutions.
This subscription base, the article argues, provides recurring revenue that should remain relatively resilient during a recession. It also cites pricing power, suggesting Microsoft can pass some cost increases to customers without a major loss of demand.
The article further highlights Microsoft as a dividend stock. It states that the company has increased its dividend payouts by almost 153% over the past 10 years, and that regular dividends could help offset market declines during downturns. It also says there is little reason to believe Microsoft would suspend its payouts.
On financial strength, the article says Microsoft’s underlying business is supported by an AAA rating from S&P Global, along with significant free cash flow and a conservative cash payout ratio of 33.6%.
The article argues that despite the stock’s recent run over the past two weeks, Microsoft’s shares are still reasonably valued compared with other members of the “Magnificent Seven.” It says Microsoft is not the cheapest on forward price-to-earnings (P/E), but it is not the most expensive either.
Excluding Tesla as an outlier, the article states that Microsoft’s forward P/E is lower than the average of the remaining six peers. It concludes that while near-term momentum may vary, Microsoft’s long-term prospects remain attractive for investors buying at current levels.
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