Is Now a Good Time to Buy Microsoft Stock?

It hasn't been a amusive clip to beryllium a Microsoft (NASDAQ: MSFT) shareholder. Shares of the bundle and unreality computing elephantine person been hammered, falling astir 7% past week amid a broader marketplace sell-off. Year to date, the tech banal is down much than 26% arsenic of this writing.

For investors looking astatine the company's caller fiscal results, this crisp diminution mightiness look similar a screaming buying opportunity. After all, Microsoft conscionable reported different exceptional 4th of top- and bottom-line growth, driven by its awesome unreality operations.

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But risks are mounting connected the horizon. While Microsoft's concern is presently performing well, a person look astatine the competitory scenery reveals that rival Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) is gaining superior crushed successful the cloud. Further, the accelerated advancement of artificial quality (AI) is introducing caller semipermanent risks to the software-as-a-service exemplary that Microsoft relies connected truthful heavily.

So, is this a bully clip to bargain the stock? Is it really a bully clip to debar it?

If you were to justice Microsoft solely connected its fiscal second-quarter performance, the stock's sell-off would look wholly unwarranted.

During the period, which ended connected Dec. 31, Microsoft's gross roseate 17% twelvemonth implicit twelvemonth to $81.3 billion. And profitability was adjacent much impressive. The company's non-GAAP (adjusted) earnings per stock jumped 24% to $4.14.

The superior maturation engine, arsenic usual, was the company's unreality operations. Microsoft Cloud gross accrued 26% twelvemonth implicit twelvemonth to $51.5 billion. Within that total, "Azure and different unreality services" revenue, which represents the company's unreality computing business, climbed an awesome 39%.

Adding to the bull case, Microsoft's commercialized remaining show obligations (RPO) -- a measurement of contracted but not yet recognized gross -- surged 110% twelvemonth implicit twelvemonth to $625 billion.

On the surface, the concern looks unstoppable.

However, the communicative changes erstwhile you zoom retired and look astatine the broader unreality computing market.

Microsoft is investing heavy to seizure AI workloads, with superior expenditures soaring 66% twelvemonth implicit twelvemonth to $37.5 cardinal successful fiscal Q2. But contempt this monolithic spending, contention is heating up.

Consider the caller results from Alphabet. In the company's astir caller quarter, Alphabet's Google Cloud gross accelerated to a staggering 48% year-over-year maturation rate, reaching $17.7 billion. This importantly outpaced Azure's 39% growth. Even more, Google Cloud's maturation complaint was up from 34% successful the anterior 4th and Microsoft's "Azure and different unreality services" gross really decelerated. This cloud-computing gross maturation complaint was 40% successful the anterior quarter.