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Microsoft stock has dipped for the eighth consecutive session.
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Large tech firms often have the resources to invest in projects that may take years to yield profits.
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For investors seeking a growth stock that’s reasonably priced, Microsoft might be a suitable choice.
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10 stocks we like better than Microsoft.
microsoft (NASDAQ: MSFT) This downturn extends the stock’s streak to eight days.
Reports indicate this is Microsoft’s longest losing streak since 2011, coinciding with the release of its first quarter financial results for the fiscal year 2026 on October 29th.
Currently, Microsoft sits over 8% lower than its 52-week peak, which raises some eyebrows considering its status as a mega-cap stock. It seems like a bargain at this point.
Many other sizeable tech stocks are also experiencing dips.
meta platforms has seen a considerable drop following its earnings announcement. oracle‘s stock has lost nearly all its gains after releasing its fiscal 2026 first quarter results alongside a significant cloud agreement with OpenAI. Meanwhile, Nvidia and Palantir Technologies have been in the spotlight since a notable investor disclosed a substantial short position in both AI growth companies.
The downward trend in major AI stocks suggests that investors are maturing in their approach to AI investments. Rather than responding positively to new AI spending announcements, they’re now looking for a clearer path to actual results from these investments.
In its latest quarter, Microsoft stated it would ramp up its spending on graphics and central processing units to meet increasing demands related to AI and cloud services. This might surprise some, especially since Microsoft’s capital expenditures have substantially increased over the last three years.
Interestingly, Microsoft has managed to enhance its operating margins and free cash flow despite rising capital spending.
However, some investors might worry that investing heavily in long-term projects could eventually impact free cash flow and lower profit margins.
Evidence suggests that Microsoft is adjusting its capital allocation due to its AI pursuits. The company has reduced its stock buybacks to allow for increased capital spending without harming its financial stability. Long-term investors might generally prefer Microsoft to enhance operating profits rather than just lowering share counts via buybacks. But that pressure to bring ideas to fruition is certainly rising.
It’s understandable for some investors to question the speed of Microsoft’s investments in AI, but I’d argue that this is precisely the direction Microsoft should pursue.
When it comes to companies that can afford to take risks, Microsoft stands out due to its solid balance sheet and lucrative business model. In the past quarter, all three of Microsoft’s business segments, including its consumer computing division, reported operating margins of at least 30%. The larger the segment, the higher the profit margin tends to be.
To put it simply, even though Microsoft may be overspending on AI, it still has numerous ways to boost revenue and offset impacts from increased capital expenditures. In contrast, Amazon heavily depends on its cloud services for cash flow, while alphabet has its search business, and Oracle is taking on significant debt for its rapid expansion.
One of the primary challenges during a vibrant bull market is discerning which stocks are rising due to improved fundamentals versus those experiencing artificial inflation. Microsoft has more than doubled in growth over the past three years. Yet, it’s still reasonable to conclude that this stock offers good value, as Microsoft is at a favorable position with various strategies to maintain high-margin profits over the coming decades.
For investors looking for a strong player in AI that can endure cyclical slowdowns and broader economic downturns, Microsoft appears to be a solid choice right now.
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I work at Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, Oracle, and Palantir Technologies.
