Microsoft

MSFT

Market cap $2.92T

Gartner expects enterprise software spending to reach $1.4 trillion this year. Microsoft is generating a growing mountain of cash, which provides ample funds to invest in AI innovation.

Analysts expect the biggest companies to dominate the market once again in 2026. While most price targets point to above-average returns among the trillion-dollar club, this stock has 50%-plus upside.

President Donald Trump announced the U.S. will blacklist Anthropic over its refusal to loosen safeguards for the Pentagon, just as the AI company's tools are disrupting cyber stocks. OpenAI subsequently signed an agreement with the U.S. Department of Defense to deploy its models within the government's network. Claude's new security features fueled a cyber scare trade, exacerbated by hotter-than-expected inflation data and rotation away from big tech.

Deere & Co. is capitalizing on AI in a unique way. GE Vernova has been on a tear since it went public two years ago.

Microsoft's stock has sold off heavily recently. The shares are now priced at valuation levels near their 10-year lows.

Microsoft is staying neutral in the artificial intelligence arms race. It's been several years since the tech giant has been this cheap.

Alphabet clawed back from a massive undervalued state during 2025. Microsoft has no good reason to be selling off.

Billionaire Peter Thiel in the fourth quarter liquidated his hedge fund's positions in Apple and Microsoft, two stocks that most Wall Street analysts believe are undervalued. Apple just reported strong financial results, but the company faces a significant headwind in the rising price of memory chips and the stock trades at an expensive valuation.

Microsoft, Amazon, and Meta are each well off their all-time highs. These stocks haven't been this cheap since the depths of last year's tariff sell-off.

Microsoft Corporation stock sold off amongst other software companies as investors worry that these firms don't have a durable business model in the AI age. The selloff was more brutal for low-margin stocks and less so for high-margin stocks YoY. Given that Microsoft has one of the highest margins, the underperformance was mild. Growth stock investors would buy SaaS names at insane multiples and disregard margins, but we are seeing this behavior changing as these low-margin stocks start to look more risky.