Here’s why Microsoft stock<\/a> is still a buy. <\/p>\n Investors have been skeptical that tech giants like Microsoft, Meta Platforms, Alphabet, and others are spending too much on artificial intelligence infrastructure, with little to show for it. That’s why they were pleasantly surprised when Microsoft reported $100 billion in Azure cloud revenue for the full 2026 fiscal year, a significant 41% jump from 2025. <\/p>\n Microsoft sells access to its Azure cloud and AI services to other companies and is the second-largest cloud player behind Amazon. To stay competitive in the AI age, all of the major cloud providers are investing hundreds of billions of dollars to build AI infrastructure. For example, Microsoft spent $175 billion (adjusted from $190 billion, due to an accounting change) in capital expenditures (capex) for fiscal 2026, and tech companies will spend an estimated $750 billion this year on AI capex. <\/p>\n That’s a sizable sum, and for many of Microsoft’s peers, high capex has led to\u00a0lower free cash flow. Alphabet’s free cash flow fell to negative $5.9 billion in its most recent quarter, down from a positive free cash flow of about $25 billion in the year-ago quarter. And Meta’s free cash flow fell 91% to only $784 million in Q2 2026. <\/p>\n Meanwhile, Microsoft declined just 23% and still had a positive free cash flow of $19.6 billion in its fiscal Q4 of 2026. That’s exactly the financial stability that AI investors are looking for right now. They want to see tech companies invest in AI, but in a way that actually drives the company forward. <\/p>\n Why Microsoft stock is still a buy <\/p>\n Even with its recent share price gains, Microsoft is still relatively inexpensive. The company’s stock has a trailing price-to-earnings (P\/E) ratio of just 28, which is significantly below the technology sector P\/E average of 35. <\/p>\n That makes Microsoft stock<\/a> a good deal right now. But the stock isn’t a buy just because it’s cheap. It’s also the fact that Microsoft has demonstrated it can make major investments in artificial intelligence and will actually generate revenue for the company without obliterating its free cash flow. <\/p>\n As tech companies continue to spend money hand over fist to win the AI race, Microsoft just laid out the playbook for how to succeed with AI — and investors are taking notice. <\/p>\n Should you buy stock in Microsoft right now? <\/p>\n Before you buy stock in\u00a0Microsoft, consider this: <\/p>\n The Motley Fool\u00a0Stock Advisor\u00a0analyst team just identified what they believe are the\u00a010 best stocks<\/a>\u00a0for investors to buy now\u2026 and\u00a0Microsoft\u00a0wasn’t one of them.\u00a0The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. <\/p>\n Consider when\u00a0Netflix\u00a0made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $421,511!*\u00a0Or\u00a0when\u00a0Nvidia\u00a0made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation,\u00a0you’d have $1,381,960!* <\/p>\n That performance is why people listen. With a track record of\u00a0beating the S&P 500 by nearly 5x,\u00a0Stock Advisor\u00a0offers a distinct advantage. Don’t miss the latest top 10 list, available with\u00a0Stock Advisor, and join an investing community built for the long haul. <\/p>\n See the 10 stocks \u00bb<\/a> <\/p>\n *Stock Advisor returns as of August 16, 2026. <\/p>\n Chris Neiger<\/a> has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool has a disclosure policy<\/a>. <\/p>\n<\/a> Image source: Getty Images. Why investors were so excited <\/p>\n