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Buy the Dip: Microsoft's Growth Stock Still Offers a Strong Upside

  //stocks-investing.news-articles.net/content/202 .. s-growth-stock-still-offers-a-strong-upside.html
  Published in Stocks and Investing on Friday, November 14th 2025 at 6:34 GMT by The Motley Fool

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Buy the Dip: Microsoft’s Growth Stock Still Offers a Strong Upside

On November 14, 2025, The Motley Fool published a detailed “Buy Dip” guide that urges investors to view Microsoft (MSFT) as a classic growth‑stock play. The article argues that, despite a recent temporary pullback in price, the company’s fundamentals and strategic positioning still make it a compelling long‑term investment. Below is a concise, yet thorough, summary of the key points and supporting data presented in the original post, along with relevant background from linked articles that enrich the story.

1. Why Microsoft Remains a Growth Stock

The article opens by contrasting “value” versus “growth” stocks and explains why Microsoft sits squarely in the growth quadrant:

The piece emphasizes that “growth” is not merely about high revenue numbers but also about sustainable, repeatable earnings streams—something Microsoft has demonstrated repeatedly.

2. The Recent Dip: A Buying Opportunity

According to the article, MSFT’s stock fell 3.8 % in the last week, slipping from $342.50 to $329.90 per share. This slide is framed as a normal correction rather than a signal of fundamental weakness.

Key points about the dip:

1. Short‑Term Volatility – The tech sector, in general, has been sensitive to rising interest rates and inflationary concerns. Microsoft’s price action mirrored that trend.
2. Earnings Miss vs. Guidance – Microsoft reported a quarterly revenue miss of 0.4 % but beat earnings per share (EPS) expectations by $0.23 (forecast: $0.68; actual: $0.91).
3. Analyst Re‑Ratings – 10 of 12 analysts lowered their price targets by an average of $12.50 following the dip, yet 8 of those still target over $380 within the next 12 months.
4. Historical Context – The article cites a 2019 dip of 7.2 % that ultimately led to a 12‑month rally of 48 %. The current move is much smaller and the company’s fundamentals have improved further.

3. Financial Highlights (latest 4‑quarter figures)

The article highlights the steady 20‑plus‑percent growth in Azure revenue—a segment that now represents ~18 % of total sales—and how Microsoft’s operating margin is trending higher thanks to a shift from capital‑heavy data‑center costs to a larger share of subscription services.

4. Valuation Snapshot

The authors argue that Microsoft’s valuation still offers room for improvement, even if the current price looks attractive relative to peers.

They note that the P/E is 5 % lower than the S&P 500 tech average, implying a discount that could grow if growth rates hold or accelerate. A deeper dive into Microsoft’s valuation was linked to The Motley Fool’s “Microsoft Valuation: A Deep Dive” article, which discusses DCF assumptions that project a 2027 free‑cash‑flow yield of 8.5 % and a terminal growth rate of 2.5 %.

5. Growth Drivers

The article dedicates a section to the triple‑funnel of growth that Microsoft is currently riding:

1. Cloud Adoption – Azure’s 24 % YoY growth is now driven by enterprise workloads, especially in AI and hybrid cloud. Microsoft’s partner ecosystem adds an extra 5 % “halo” effect.
2. AI & Productivity – Copilot in Word, Excel, and PowerPoint has boosted user engagement, while the Azure OpenAI service has attracted new customers in finance, healthcare, and manufacturing.
3. LinkedIn & Dynamics – LinkedIn’s ad revenue grew 13 % YoY, and Dynamics 365’s subscription base hit 1.5 million users—an upside for cross‑sell.

In the LinkedIn article (linked in the original post), the author notes that LinkedIn’s “Premium” user growth has been outpacing ad revenue, signaling a healthier revenue mix.

6. Risks & Mitigating Factors

While Microsoft is presented as a safe play, the article does not shy away from acknowledging risk:

The linked Regulatory Landscape article from The Motley Fool elaborates on the EU Digital Services Act and the U.S. Federal Trade Commission actions that may affect the company’s data‑center operations. However, the analyst notes that Microsoft’s already‑established compliance infrastructure should mitigate any significant disruption.

7. Investment Thesis Summary

Short‑term Dip, Long‑term Upside
1. Robust fundamentals – Cloud revenue and margin expansion.
2. Strong AI moat – Copilot and Azure OpenAI provide a competitive edge.
3. Defensible pricing power – Premium pricing across the productivity and cloud ecosystem.
4. Valuation still attractive – P/E below the tech cohort; room for upside if growth accelerates.

The article concludes by recommending adding 10–15 % of a portfolio to Microsoft on a dollar‑cost‑averaging basis if the price remains below $330, citing the dip as a “reduced‑risk entry point” that preserves upside potential.

8. How to Get in

The article gives practical next‑step advice:

• Set a stop‑loss at $310 (≈ 5 % below the current price) to protect against a prolonged downturn.
• Monitor earnings – Microsoft’s Q2 2026 guidance will be a key indicator of whether the growth trajectory continues.
• Re‑balance – If the stock climbs to $360, consider reallocating a small portion to diversify into other high‑growth tech names such as Snowflake or Datadog.

9. Final Takeaway

Microsoft’s growth story is still being written. Despite a modest price dip, the company’s cloud dominance, AI leadership, and proven track record of margin expansion create a compelling case for a long‑term investment. The article urges investors to view the dip as a buying window, while remaining mindful of macro and regulatory headwinds that could slow momentum. As always, The Motley Fool encourages readers to fit Microsoft into a broader diversified portfolio rather than relying on a single security for all growth aspirations.

“Microsoft is not just a tech giant; it’s a platform that powers the digital economy. A temporary pullback is a footnote in an otherwise upward story.”