Microsoft (Nasdaq: msft) The stocks did not go anywhere during the past year, currently hovering about six months. The company has done an excellent income of artificial intelligence (AI), but the improvements that were reported in artificial intelligence models Highlighting the elimination of artificial intelligence And anxiety.
Of the 30 components in Dow Jon's industrial average(Djindices: ^DJI)Microsoft stands out as a unique balance in growth capabilities, value, and a small negative income like cherries at the top of a strong investment thesis. Many other DOW components have a strong growth in profits or are good value, but not both.
That is why Microsoft is the best Dow Jones stock to buy now.
Photo source: Getty Images.
Let's take a trip to 2023: Microsoft is launched for a large year, as the stock decreased by 28.7 % in 2022 in Lockstep with a brutal decrease via Tech Big.
The administration hosted its profit call in the second quarter of 2023 on January 24, 2023. During the call, the company shared exciting news about artificial intelligence and partnership with Openai, including the support of ChatGPT and news that Microsoft will be the exclusive Openai cloud cloud- led by Azure Ai Services.
With the continuation of 2023, the excitement starts from artificial intelligence, Nafidia (Nasdaq: nvda) Reporting to SIS in sales of graphics processing units (GPU) for data centers. Microsoft 2023 shares ended 56.8 %, with the year closed at $ 376.04 per share. Since then, only 8.6 % arrow has risen.
This is a good example that the company's share price is on the basics. Artificial intelligence was a game change for Microsoft, which led to faster growth than the upper lines and upper margins. But it did not change the growth in the same way, as is the case with the shares of other large technology such as Nafidia and Definition platforms. Instead, Microsoft AI is used to improve current products and develop new tools and services.
Microsoft 365 Copilot is the Amnesty International for the leading company program. In its profit call in the second quarter of 2025, the administration described 365 Copilot “User interface for artificial intelligence”-which means that it deals with the employee's daily productivity. (The user interface means the user interface.) Continues to see the accelerated adoption of 365 Copilot.
GitHub Copilot helps improve the efficiency of the developer. GitHub now has 150 million developers, an increase of 50 % in just two years.
In the second quarter of 2025, Azure and other cloud services grew by 31 % on an annual basis, including an increase of 157 % in artificial intelligence services.
Behind Microsoft 365, GitHub and Azure, Microsoft has other software products such as difference, Bing and LinkedIn. It also contains a huge gaming slice with Xbox and Activision and sells consumer products such as Microsoft Surface and computer accessories, among other things. Despite many final markets and traditional margin offers, the company has grown and margin at an impressive rate.
The following graph shows how the rapid Microsoft sales growth in recent years also came with higher margins, a testimony of artificial intelligence investments.
However, there are fears that Microsoft Amnesty International spending may be excessive.
This fiscal year, the administration plans to spend $ 80 billion on cloud -based requests. The massive investment can affect profitability in the short term.
The analysts' consensus estimates to $ 13.16 in the profits of 2025 for the financial share (EPS) and $ 15.07 in 2026 EPS. For the context, Microsoft has reached $ 11.80 in the reduced EPS in the fiscal year 2024, an increase of 20 % compared to the fiscal year 2023, while the 2025 financial target involves only 11.2 % growth. So at least in the short term, the growth growth is slowdown. The margins can also decrease if artificial intelligence spending is not immediately translated into measurable results.
At any time the company is betting on a big idea, it puts pressure on these investments to pay its fruits. But there is also a risk to be very idle and a decrease in the artificial intelligence race.
Therefore, the two biggest questions must be asked by investors whether the company can spend this a lot on artificial intelligence without hurting its financial health, and if the investment dollars are heading towards efforts worthy of attention.
Regarding financial health, Microsoft is good as you happen. The company has finished the calendar year 2024 with $ 71.56 billion in cash, cash rewards, short -term investments and only $ 39.72 billion of long -term debts. In the fiscal year 2024, which ended on June 30, 2024, it redrared $ 17.25 billion of shares and paid $ 21.77 billion of profits. Although the payment batch was higher, re -purchases were less than $ 5 billion in the fiscal year 2023.
The administration can continue to retreat from re -equipping shares to finance artificial intelligence investments without getting more debt. However, purchases have helped compensate for compensation for Microsoft shares, reduce the number of shares over time, and accelerate EPS growth. Less than re -purchase will pressure the basic work to push profit growth.
In short, Microsoft can spend more on artificial intelligence.
As for the second question, there is a reason for the belief that artificial intelligence investments deserve it. Microsoft is currently the cloud player 2, advanced alphabetGoogle cloud but behind it Amazon Web services.
As the demand for cloud computing is growing to support the workflow of artificial intelligence, Microsoft wants to ensure that it is in a good position in obtaining the market share by providing advanced data centers and the best artificial intelligence services. If it does not take its share in the market, its investments can still bear fruit as long as the total cloud computing pie grows.
As an ancient technical company, Microsoft has not been converted by artificial intelligence in the same way as smaller and fastest growing companies like Palantir Technologies Or more pure artificial intelligence names such as NVIDIA. But it was positive for the company. It has Microsoft Financial Health and the deep pockets needed to pour money in building an Amnesty International's infrastructure.
The price of the rising arrow and the growth of fixed profits pushed a price ratio to symbols from Microsoft (P/E) to its lowest level per year. In fact, P/E is currently 33, which is around its average over the past three years to the past ten years. But it can be said that it is a high -quality work with the risk of better growth today from the past years, which makes its evaluation more convincing.
As we mentioned, the administration spends a ton on stock profits every year. The company has increased the payment of its payments every year nearly two decades ago, and although the shares give only 0.8 %, the increasing profit distributions from Microsoft provides an additional incentive to buy and keep the shares.
Through a varied business model, AI's budget at reasonable prices, reasonable evaluation, Microsoft examines all funds for an essential growth arrow for purchase now and building a portfolio around it.
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*The stock consultant dates back from February 21, 2025
Randy Zuckerberg, former Director of Market Development and Speak for Facebook and Sister to Meta Platforms, Mark Zuckerberg, member of Motley Fool Board of Directors. John Maki, former Chole Foods Market, a affiliate company, a member of the Motley Fool Board of Directors. Susan Fry, CEO of Alphabet, is a member of the Motley Fool Board of Directors. Daniel Fileber He has no position in any of the mentioned stocks. Motley Fool has positions in Technologies Alphabet, Amazon, Meta, Microsoft, Nvidia and Palantir. Motley Fool recommends the following options: Long January $ 2026 $ 395 on Microsoft and Short January 2026 $ 405 calls on Microsoft. Motley deception has Disclosure.
