Microsoft Stock: Time to Double Down?

Bram Berkowitz, The Motley Fool

Thu, Jun 5, 2025, 8:37 AM 4 min read

• Microsoft has been one of the strongest performers in the Magnificent Seven this year.

• The company's various business segments are less impacted by tariffs than its peers.

• Microsoft's artificial intelligence Azure business also had a huge first quarter of 2025.

• 10 stocks we like better than Microsoft ›

For the last couple of years, it's been easy to group the "Magnificent Seven" together. These massive companies have become the dominant tech players and have taken advantage of artificial intelligence (AI) like no other group of companies in the market.

But once President Donald Trump took office and enacted sweeping tariffs, the group began to diverge based on how tariffs impacted their supply chains and the types of products and services they sold.

Microsoft (NASDAQ: MSFT) has been one of the strongest, most resilient performers in the group. Is it time to double down on Microsoft stock today?

While all the companies in the Magnificent Seven operate in the tech sector, most of them have been able to develop diversified revenue streams. Microsoft has many unique tech businesses, including cloud services, Microsoft Office 365 products, gaming, LinkedIn, search and advertising, and more.

Luckily for Microsoft, many of these businesses are services the company provides and therefore are less impacted by tariffs, which likely explains its strong performance in 2025 (as of June 3).

But a big reason for the company's strong performance is Azure, which falls under the company's cloud services and products category. Azure and other cloud services revenue in the company's third fiscal quarter of 2025 (quarter ended March 31, 2025) grew 35% year over year.

Azure is the foundation of Microsoft's artificial intelligence offerings and business. Launched in 2010, Azure started as a cloud computing network of data centers that companies could run their business on instead of maintaining their own infrastructure.

Since then, Azure has branched out to offer numerous other products, including in artificial intelligence. Through a partnership with OpenAI, Azure provides AI models that developers and businesses can leverage to build their own AI applications. Microsoft has also integrated AI tools from Azure into its own applications, such as Microsoft 365 Copilot, to automate repetitive tasks and improve efficiency.

Many investors questioned Microsoft's significant capital expenditures (capex) on AI over the last two to three years, wondering when they would see a payoff, which has now started to play out. Interestingly, on the company's most recent earnings call, Microsoft CFO Amy Hood pointed out that it's getting harder to separate AI-related revenue from non-AI-related revenue, as the two are starting to feed off of one another.