Microsoft Shares Are A Buy

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Microsoft Shares Are A Buy

Microsoft Shares Move Lower - Is This A Buying Opportunity?

Microsoft (MSFT) shares moved lower after the results showed a decline in revenue from the Azure cloud platform. The results showed that revenue was close to the bottom end of the guidance and thus was taken as negative.

Given that the Azure cloud computing platform is a big earner for Microsoft (MSFT), it was only natural for the stock to decline. However, the decline in Microsoft (MSFT) also presents an opportunity for investors to buy this stock at a cheap price.

Azure Revenue Up By 31%

The Azure revenue jumped by 31% during Q2 but was below Q1's growth of 33%. Although the growth is still strong, it failed to impress the investors.

According to Microsoft (MSFT), the revenue run rate in the AI business has already crossed the $13 billion figure. Also, the revenue from the Azure AI is around 157% y/y.

Looking ahead, Microsoft (MSFT) believes that revenue from Azure will grow by 31/32% during Q3. As for other Azure businesses not related to AI, the company believes that it remains a constrained environment.

Although the forward guidance and revenue of Azure weren't so great, it is still a key part of the company's business. Also, the business related to AI remains robust and can deliver good performance going forward.

Microsoft (MSFT) believes that a decline in computing costs will also lead to more consumption. Meanwhile, the revenue from Office 365 has also improved as many users are now using AI Copilot.

As of now, the forward P/E ratio of Microsoft (MSFT) is below 28. This is based on the estimates for the fiscal year 2026 and shows that the valuation is fair.

And when we consider that the company stands to gain a lot from AI traction, it is a no-brainer that Microsoft (MSFT) is a buy. While there are some challenges, they are not that big to stop the Microsoft (MSFT) stock from moving higher.

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