Microsoft Crowned the Ultimate Buy-and-Hold Stock

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  Published in Stocks and Investing on Thursday, November 13th 2025 at 6:58 GMT by The Motley Fool

If I Could Only Buy and Hold a Single Stock, This Is the One It Would Be

Choosing just one company to hold for the long haul is a thought experiment that many investors love to play out. It forces you to drill down to the fundamentals that matter most: a durable moat, solid cash generation, and a valuation that rewards patient ownership. On November 13, 2025, The Motley Fool tackled exactly that challenge, zeroing in on a single stock that the author believes offers the best blend of growth, stability, and upside potential: Microsoft Corporation (MSFT).

Why One Stock?

The article opens by explaining the difficulty of narrowing down a single winner from the thousands of options in the market. The author argues that a “buy‑and‑hold” strategy, rather than a trade‑by‑trade approach, works best when you can identify a company whose business model is resilient to economic cycles, whose leadership has a clear long‑term vision, and whose financials demonstrate the ability to generate free cash flow while still investing in growth.

To arrive at their pick, the author uses a systematic checklist:

1. Competitive Moat – Is the company protected by network effects, proprietary technology, or brand loyalty?
2. Cash Flow & Dividend – Does it produce excess cash and return it to shareholders?
3. Valuation – Is the stock reasonably priced relative to its earnings, growth, and peers?
4. Growth Story – Does it have a credible, high‑potential growth engine that will keep it relevant for years to come?
5. Risk Profile – What regulatory, competitive, or macro risks could derail the business?

Microsoft ticks all these boxes, and that is why it made the final cut.

The Microsoft Advantage

1. A “Super‑Business” Built on Multiple Engines

Microsoft’s core businesses are now dominated by three high‑growth, highly profitable engines:

• Azure – the cloud platform that powers everything from Microsoft’s own services to third‑party enterprises. Azure has grown from a niche infrastructure provider into the second‑largest cloud platform in the world, capturing roughly 25% of the global market share (behind Amazon Web Services). Its revenue CAGR of ~30% over the past five years underscores the sustained demand for cloud computing.

• Office 365 & Microsoft 365 – the subscription‑based productivity suite that has become the de‑facto standard for both consumers and businesses. The shift from perpetual licenses to recurring subscriptions has transformed Office into a cash‑flow powerhouse with predictable revenue streams.

• LinkedIn & Gaming – LinkedIn adds a strong professional networking layer, while Xbox and Game Pass offer a recurring revenue model that keeps the company embedded in a high‑margin entertainment ecosystem.

These engines are not siloed; they inter‑lock. For instance, Azure powers AI workloads that feed into Microsoft’s productivity tools, while LinkedIn provides data for AI services.

2. Free Cash Flow, Dividends, and Buybacks

Microsoft’s free cash flow (FCF) in 2024 was a staggering $70 billion, a 12% increase YoY. The company has been returning capital to shareholders in several ways:

• Dividend – A 7% dividend yield as of the article’s publication, with a long history of 7% year‑over‑year growth.
• Share Buybacks – Over $110 billion in buybacks in the past five years, which has helped drive the share price upward and boost earnings per share.

Because Microsoft’s operating cash flow remains in excess of its capital‑expenditure needs, it can continue to fund both growth and shareholder returns.

3. Valuation Context

The article highlights Microsoft’s trailing‑12‑month price‑earnings ratio (P/E) of 28, which, while higher than the S&P 500 average, is still modest when considering its earnings growth (approx. 14% YoY) and the high‑margin nature of its cloud and software businesses. Microsoft trades near a 2025 earnings projection of $20 per share, giving the stock a P/E of roughly 30. That valuation leaves room for upside while still rewarding the company’s long‑term trajectory.

4. The AI Upside

AI has emerged as the single biggest growth catalyst for Microsoft. The company’s Azure OpenAI Service—which offers customers GPT‑4 and other advanced models—has already attracted marquee clients such as JPMorgan and Verizon. Microsoft’s integration of AI across Office 365, Dynamics 365, and its cloud platform positions it to capture a sizeable portion of the projected AI‑related revenue surge, which could add $10–$15 billion in incremental revenue over the next five years.

Risks and Counter‑Arguments

No stock is without risk, and Microsoft is no exception:

• Regulatory Scrutiny – As a tech giant, Microsoft faces antitrust investigations, especially around data privacy and integration of competing services.
• Competition – AWS remains the cloud leader, and Amazon, Google, and Salesforce all vie for enterprise contracts.
• Cybersecurity – A breach could erode trust, especially given Microsoft’s penetration into the enterprise market.
• Macroeconomic Headwinds – Inflationary pressures or a recession could compress IT budgets and slow cloud adoption.

The author acknowledges these risks but concludes that Microsoft’s strong cash position, diversified product mix, and strategic focus on AI mitigate many of the challenges.

How to Own It

To implement a “buy‑and‑hold” strategy, the article recommends purchasing the stock through a traditional brokerage or a tax‑advantaged account like an IRA. It stresses the importance of a long‑term horizon—10 to 20 years—because the benefits of compound growth, dividends, and AI‑enabled expansion compound over time. The piece also provides a link to Microsoft’s Investor Relations page for real‑time financials, earnings call transcripts, and dividend statements, allowing investors to stay updated on key metrics.

Takeaway

Microsoft’s combination of a multi‑engine, high‑margin business model, robust cash generation, and a clear AI‑driven growth trajectory makes it an exemplary candidate for a “single‑stock, buy‑and‑hold” portfolio. While the stock trades at a higher valuation than many peers, the author argues that the potential upside—especially from cloud and AI—more than justifies the premium for a patient investor.

In short, if you had to pick one company to hold for the long haul, The Motley Fool’s 2025 recommendation points to Microsoft as the safest bet to capture the next wave of technology growth while enjoying consistent dividends and capital appreciation.