I bought Microsoft again this week, and I will buy it again next week. The stock keeps getting cheaper while the business it represents keeps getting bigger, and that math is the whole confession.
Microsoft (NASDAQ:MSFT | MSFT Price Prediction) is the one hyperscaler willing to show the work on AI monetization. On the Q3 FY26 call, Satya Nadella told investors “Our AI business surpassed $37 billion ARR, up 123%.” That is booked revenue running at that pace right now.
Shares closed at $384.36 on Thursday, down 20.17% year to date and 23.05% over the past twelve months. Meanwhile Q3 FY26 revenue landed at $82.89 billion, up 18.3% YoY, EPS came in at $4.27 for a fourth straight beat, and Azure grew 40%. The panic lives in the ticker. The fundamentals kept working.
Three Numbers That Keep Me Buying
First, the backlog. Commercial remaining performance obligations reached $627 billion, up 99% YoY. That is contracted future revenue, nearly doubled in twelve months. When enterprises sign nine-figure checks committing to years of Azure and Copilot consumption, that reads as enterprise AI adoption in the plumbing.
Second, the quality of the earnings underneath it. Operating margin last quarter was 46.3%, return on equity is 34%, debt to equity sits at 0.176, and interest coverage runs at 53.89x. Microsoft guided to roughly $190 billion in calendar 2026 capex and still generated $71.61 billion of free cash flow in FY25. This is a fortress paying for its own construction crew.
Third, the valuation. Trailing P/E is 23, forward P/E is 20, and the stock trades well below its 200-day moving average of $443.59. Getting a 46% operating margin business growing revenue at 18% for a mid-20s multiple is when I stop asking clever questions.
Why Not Amazon, Alphabet, or Oracle
Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL), and Oracle (NYSE:ORCL) all compete for the same enterprise AI dollar. My money keeps going to Microsoft because none of them can show me a $627 billion RPO alongside a $37 billion AI run rate growing 123% sitting on top of $217 billion of TTM gross profit. That software annuity is what pays the GPU bill while the competition still argues about theirs.
The Real Risk
The $190 billion capex commitment is the thing that could actually hurt me. If enterprise AI monetization slows before the workflows compress, the return on that spend gets ugly. CFO Amy Hood addressed it directly: “We remain confident in the return on these investments given higher demand signals and increasing product usage.”
What keeps my finger on the buy button is what is already on the books. Paid Copilot seats crossed 20 million, up 250% YoY, with Accenture alone at 740,000 seats. Hood said Azure will stay capacity constrained “at least through 2026.” Demand exceeding supply reads as a queue forming.
One post on r/stocks last month put it plainly: “Microsoft is now cheaper than the April 2025 Tariff crash, yet TTM EPS is up 30%. Huge bargain.” The Street agrees on direction if not urgency: 54 buy ratings against three holds and zero sells.
My cost basis keeps improving. My share count keeps growing. Every ninety days Microsoft hands me another receipt. I am buying more.
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