Microsoft stock, trading under the ticker MSFT, rarely dips significantly, but in early 2026, it has experienced a notable pullback. As of February 20, 2026, the share price closed at approximately $397.24, marking a decline of more than 25% from its October 2025 highs. This drop has occurred without any major negative news or fundamental issues at the company, creating what some investors see as an attractive buying opportunity.
Microsoft remains one of the most powerful and stable technology companies in the world, with a market capitalization around $2.9 trillion. Its core businesses—such as Windows operating systems, Office productivity software, and cloud computing through Azure—continue to perform strongly. In the second quarter of fiscal year 2026 (ending December 31, 2025), the company reported 17% year-over-year revenue growth. Azure, Microsoft’s cloud platform, is expanding quickly and has a large backlog of projects waiting to launch. Additionally, Microsoft plays a key role in artificial intelligence (AI) by hosting various generative AI models on Azure and partnering closely with leaders in the space.
Despite this solid performance, the stock has fallen sharply in 2026, making it look “on sale.” Its forward price-to-earnings (P/E) ratio stands around 24 times expected future earnings, the lowest level in nearly three years. This valuation is close to the S&P 500’s forward P/E of about 21-22 times, suggesting Microsoft is no longer trading at a big premium compared to the broader market.
Investors often measure success by comparing returns to the S&P 500 index, which has historically delivered around 10% average annual returns. Beating that benchmark even slightly can make a big difference over time due to compounding. For example, investing $500 monthly in an S&P 500 fund at 10% annual returns could grow to about $1 million in 29 years. Boost that return to 13% annually (just 3 percentage points more), and the same investment reaches roughly $1 million in 25 years—or nearly $1.9 million after 29 years—almost double the amount.
The author argues that Microsoft fits the profile of a high-quality stock temporarily undervalued for no strong reason. Its dominant position in software, rapid cloud growth, and AI involvement position it well to potentially deliver market-beating returns in the coming years—possibly in the mid-teens range. Buying at current levels could accelerate wealth-building goals, such as reaching millionaire status sooner, and provide long-term financial security.
Of course, no investment is guaranteed, and stock prices can remain volatile. Microsoft faces competition in cloud and AI, along with broader market risks. Some analysts highlight concerns about heavy AI spending and questions around how quickly those investments will pay off. Still, the company’s fundamentals—high profit margins, consistent growth, and a reliable dividend—make a compelling case for long-term holders.
For investors seeking exposure to a proven tech leader at a relatively attractive price, Microsoft in February 2026 may represent one of those rare chances to buy quality at a discount. Always consider your own financial situation, risk tolerance, and possibly consult a financial advisor before making any investment decisions.
