Microsoft Stock Falls Despite Cloud Growth: Should Investors Buy the Dip?
The recent decline in Microsoft’s stock has raised eyebrows among investors. Despite the company announcing robust financial results for its second fiscal quarter in 2026, shares of Microsoft (MSFT) have slipped. Contributing factors include heightened operating expense forecasts and a strong dependency on OpenAI.
Current Market Performance
As it stands, Microsoft’s stock price is down just over 0.74%, trading at approximately $430.29. This decline comes after a year in which the stock had mixed performance, reflecting broader market uncertainties.
- Current Price: $430.29
- Market Cap: $3.2 trillion
- Today’s Change: -0.74% or $-3.21
- Day’s Range: $426.45 – $439.60
- 52-Week Range: $344.79 – $555.45
- Volume: 59 million
- Average Volume: 27 million
- Gross Margin: 68.59%
- Dividend Yield: 0.79%
Cloud Growth Drives Revenue
Microsoft’s key growth driver, Azure, reported exceptional performance. Revenue from Azure jumped by 39%, marking its tenth consecutive quarter of over 30% growth. This surge indicates an ongoing demand for cloud services and artificial intelligence capabilities. The firm’s total revenue rose by 17% year over year to reach $81.3 billion.
Quarterly Performance Highlights
- Adjusted Earnings Per Share (EPS): $4.14 (up 24%)
- Intelligent Cloud Revenue: $32.9 billion (up 29%)
- Microsoft 365 and LinkedIn: $34.1 billion (up 16%)
Segment-Specific Growth
Among its various business segments, Microsoft saw the following growth rates:
| Product | Q2 Revenue Growth (Year Over Year) |
|---|---|
| Microsoft 365 Commercial | 17% |
| Microsoft 365 Consumer | 29% |
| 11% | |
| Dynamics | 19% |
Future Projections
Looking ahead, Microsoft projects Q3 revenue for fiscal 2026 to be between $80.65 billion and $81.75 billion. Analysts previously estimated $81.19 billion. The company expects Azure revenue to grow between 37% and 38% on a constant currency basis.
Should Investors Buy the Dip?
Currently, Microsoft’s stock trades at a forward price-to-earnings (P/E) ratio of 26 based on fiscal 2026 forecasts. For fiscal 2027, the ratio is 23, making the stock potentially appealing given its growth trajectory. The consistent growth in Azure, along with a close partnership with OpenAI, adds to the stock’s attractiveness, despite some inherent risks.
Given the strong market position and cloud growth, many analysts believe this dip presents a buying opportunity. As the tech landscape evolves, Microsoft is uniquely positioned to leverage its advancements in AI and cloud technology.
