I've Been Wrong About Microsoft Stock for Years. Here's Why I'm Finally Changing My Mind.

For the last five years, I've been the person rolling my eyes at Microsoft 's (NASDAQ: MSFT) valuation and calling it priced for perfection. Today, after its latest set of numbers and the way the company has embedded itself into AI , cloud, and everyday work, I'm finally willing to say it: At these levels, Microsoft is an easy buy for a long‑term investor.

Back in the 2021 to 2022 time frame, my skepticism sounded reasonable. Microsoft was trading at a rich multiple compared with its own history, and it felt like everyone already knew the bull case: dominant Windows, sticky Office, and fast‑growing Azure. I kept waiting for growth to slow or margins to crack.

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Instead, 2026 gave a very different picture. In the fiscal year that ended June 30, Microsoft's revenue climbed 18% to more than $331 billion, while operating income rose 21% to more than $155 billion. Net income hit $133.7 billion, with full‑year EPS growth comfortably above 20% even after stripping out gains from OpenAI and Anthropic investments. Those are not the numbers of a mature company just coasting on its legacy.

The AI story is where I was most wrong. I assumed the AI halo would be mostly narrative. Instead, it has become a concrete, growing business.

In the latest quarter, revenue reached $90 billion, up 18% year over year, driven by 32% growth in the Intelligent Cloud segment and Azure revenue now surpassing $100 billion annually. Microsoft says its AI business has crossed a $37 billion annual run rate, growing 123% year over year. This is not really a side hustle. It's a growth engine.

On top of this, Azure grew 43% year over year in fiscal Q4 2026, and  CEO Satya Nadella said Microsoft's custom AI chips can deliver up to 40% better performance per watt, potentially improving cloud margins and earnings.

Copilot is the clearest proof that this is real monetization, not just GPU reselling. Microsoft 365 Copilot has already passed 30 million paid seats, with net seat adds more than doubling quarter over quarter as enterprises move from pilots to production.