Microsoft’s stock hasn’t impressed many investors over the past year.
But its scale and diversification make it an evergreen play on the cloud and AI markets.

Microsoft (NASDAQ: MSFT), one of the world’s largest tech companies, is a major player in the artificial intelligence (AI) market. It owns 27% of OpenAI, the creator of ChatGPT, and it blends the start-up’s generative AI tools with other models across its cloud-based services. It’s also integrated its own Copilot AI assistant into most of its products and services.

Yet Microsoft’s stock has only risen about 6% over the past 12 months, even as many other AI stocks delivered double-digit gains. Let’s see why that happened — and why Microsoft is still one of the safest AI stocks you can own in 2026 and beyond.

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Microsoft is a balanced play on the AI market

Over the past decade, Microsoft aggressively expanded its cloud and mobile ecosystems to reduce its dependence on locally installed desktop software. It turned Azure into the world’s second-largest cloud infrastructure platform after Amazon (NASDAQ: AMZN) Web Services (AWS), and transformed its productivity software into cloud-based services and mobile apps.

That transformation set a firm foundation for its rollout of additional AI services and for the expansion of its first-party cybersecurity services and developer tools. It also continued to launch new first-party hardware devices and expand its Xbox gaming business to lock in more customers. That scale and diversification made Microsoft a balanced way to profit from the growth of the cloud, AI, consumer electronics, and gaming markets.

How fast will Microsoft grow over the next few years?

From fiscal 2025 (which ended last June) to fiscal 2028, analysts expect Microsoft’s revenue and EPS to grow at CAGRs of 16% and 18%, respectively. That growth should be driven by the increased use of Copilot across its services, the rollout of more advanced AI agents that can replace human workers, and the monetization of those advanced AI features.

Microsoft plans to spend tens of billions of dollars per year to upgrade its AI infrastructure (with new data centers, GPUs, and custom AI chips) for the foreseeable future to support those new features. That increased spending is rattling some investors, but Microsoft can easily offset that pressure with the stable growth of its higher-margin software and cloud businesses.

At $405, Microsoft’s stock still looks reasonably valued at 21 times next year’s earnings. It might not attract as much attention as higher-growth AI plays like Nvidia (NASDAQ: NVDA), but it’s one of the safest ways to increase your exposure to the expanding AI market.

Should you buy stock in Microsoft right now?

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Leo Sun has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.

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