Investors Are Offloading This AI Stock, but Should You Consider It a Strong Purchase?

February 16, 2026

At the start of the year, several stocks took a hit, but perhaps the most significant one was Microsoft (NASDAQ: MSFT). While Microsoft stands as a front-runner in AI, its stock has dropped nearly 20% in 2026, ranking it among the least favorable big tech investments right now. Yet, I believe investors shouldn’t rush to sell; instead, it might be the right time to buy.

Microsoft is getting too affordable to overlook, and I think it’s definitely worth considering at this price.

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Microsoft approaches things quite differently compared to many AI giants. Rather than creating its own generative AI model, Microsoft has opted for a different route, which comes with both advantages and disadvantages. However, the company isn’t entirely neutral; it’s a major investor in OpenAI, the creator of ChatGPT. While it has integrated ChatGPT within its software, Microsoft also provides alternative models through Azure Foundry, including xAI’s Grok and DeepSeek’s R1.

This strategy has particularly helped Azure gain traction for AI application development, significantly contributing to Microsoft’s overall performance. In the second quarter of 2026 (ending December 31), Azure experienced a growth rate of 39% compared to the same period last year. The management indicated this growth could’ve been even more substantial if the increased computing capacity were allocated for external cloud use instead of internal needs. This underscores the tremendous demand for Azure’s computing resources, both internally and externally.

Despite boasting impressive sales growth of 17% across the company in the second quarter, the stock faced declines after these results were released.

Some investors might worry about Microsoft’s substantial AI-related expenditures. Yet, Microsoft appears more cautious compared to its rivals.

Competitors in the cloud market, like Amazon (with Amazon Web Services) and Alphabet (Google Cloud), have disclosed plans to spend between $175 billion to $200 billion on capital expenditures in 2026. In contrast, Microsoft spent $37.5 billion in the second quarter but expects this figure to decrease slightly in the third quarter. Annualizing the $37.5 billion suggests Microsoft will rack up around $150 billion, which is still a significant amount but less than its competitors. The ongoing demand for AI computing surely remains high, and if Azure can sustain this upward trajectory, then expanding that computing capacity is justifiable.

If you’re an investor with a short-term focus, it makes sense to be wary of Microsoft’s spending. But for those willing to adopt a long-term, five-year perspective, there shouldn’t be too much concern; it’s a prime moment to acquire stocks.

Given Microsoft’s investment in OpenAI, the net profit figures can be misleading. Even if Microsoft retains its OpenAI shares, the gains from this investment will still reflect in net income. Therefore, I prefer evaluating Microsoft’s stock based on operating profit to remove this distortion. Viewing things this way, Microsoft stock hasn’t been this affordable since the significant market downturn in 2023. I genuinely think it’s an excellent time to invest, as we might see history repeating itself.

The market is presenting a unique opportunity to invest in Microsoft stock without the negative sentiments often surrounding it, unlike back in 2023. A few years from now, investors may regret not capitalizing on this chance with Microsoft. I genuinely believe there aren’t many more appealing options than this one.

Before diving into an investment in Microsoft stock, consider the following:

our analysts have pointed out some stocks they deem to be Best 10 stocks that have strong potential for impressive returns over the coming years, and interestingly, Microsoft wasn’t on that list.

Remember, this list was generated on December 17, 2004 – if you had invested $1,000 at that time in Netflix, your investment would be worth $414,554!* And for Nvidia, if you had invested $1,000 when first recommended in April 2005, it now equals $1,120,663!*

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*Stock Advisor will return on February 16, 2026.

Keesen Drury holds shares in Alphabet, Amazon, and Microsoft. The Motley Fool has investments in and recommends Alphabet, Amazon, and Microsoft. The Motley Fool follows a Disclosure policy.

Investors are selling this AI stock, but could it be a wise move? Initially published by The Motley Fool