The $4 Trillion Club: A Look at Microsoft and Potential Entrants

The $4 trillion club feels pretty exclusive at the moment. As it stands, only Nvidia is a member. Former members, Apple and Alphabet, seem to be making a comeback, and I wouldn’t be surprised if they rejoined in the near future. But I’ve got my eye on companies under the $3 trillion mark, especially Microsoft.

Microsoft briefly crossed the $4 trillion mark before settling back to around $2.9 trillion. This reflects a decline of about 27% for a company that’s actually still strong. For investors—like me—who might have missed out on Microsoft’s impressive growth in the past few years, this could be a tempting buying opportunity.

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It’s worth noting that when a company of Microsoft’s caliber sees such a sell-off, it usually indicates a significant shift in strategy or disappointing performance results. Interestingly, I don’t see those signs in Microsoft’s case at all.

In their second quarter of 2026, which ended December 31, 2025, Microsoft managed to increase sales by 17% year-over-year, reaching $81.3 billion. That was actually a pleasant surprise, as their projections had estimated lower revenue of between $79.5 billion and $80.6 billion.

Moreover, there were no shocking announcements about changing its AI strategy or falling demand for cloud products. On the contrary, Microsoft revealed a hefty $625 billion backlog tied to its Azure platform. AI remains central to Microsoft’s approach, and it seems they’re sticking to their plans.

This context makes the recent drop quite perplexing.

My go-to way of gauging Microsoft’s value is through its operating price-to-earnings ratio (P/E). This approach takes into account the impact of investment gains—like those from OpenAI—which contribute significantly to Microsoft’s revenue. Looking back over the past decade, Microsoft hasn’t been this reasonably priced based on that metric.

Now seems like a favorable time to consider buying stocks, as they appear undervalued without clear justification. Opportunities like this are rare, so perhaps it might be the right moment to act.

However, before diving into Microsoft stock, it’d be wise to consider other options as well.

For instance, our analysts at Motley Fool Stock Advisor have identified ten stocks that could offer solid returns—and Microsoft isn’t among them. Some of these stars, like Netflix and Nvidia, have shown remarkable growth. Just imagine if you’d put in $1,000 when these were first recommended—you’d have significantly more now.

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