Microsoft Stock Plunges 11%: Is This Your Last Chance to Buy?

Piper Sandler Stays Bullish on Microsoft’s AI-Powered Future

Piper Sandler is doubling down on its bullish outlook for Microsoft (NASDAQ:MSFT), maintaining an Overweight rating despite an alarming 11% drop in Microsoft stock prices over the past three months. The firm argues that this dip presents a golden buying opportunity for long-term investors, spotlighting Microsoft’s diversified product portfolio, a skyrocketing $13 billion artificial intelligence business growing at triple-digit rates, and a robust annual operating cash flow exceeding $100 billion. With investor discussions last week shedding light on Azure’s explosive growth, strategic capital expenditure plans, and the game-changing Project Stargate partnership with OpenAI, Piper Sandler believes Microsoft is poised to dominate the tech landscape for years to come. This in-depth analysis explores why the firm remains unshaken, diving into Microsoft’s financial strength, AI-driven momentum, and infrastructure investments that could redefine its market position.

Why Microsoft’s AI Business Is a Game-Changer

Piper Sandler’s optimism hinges on Microsoft’s ability to capitalize on its broad product offerings, which span cloud computing, enterprise software, and cutting-edge AI solutions. The firm highlighted Microsoft’s $13 billion AI business, a figure confirmed in the company’s latest Q2 FY25 earnings report, as a key driver of growth, with triple-digit year-over-year increases signaling insatiable demand. Azure, Microsoft’s cloud computing platform, is at the heart of this surge, with AI workloads reportedly soaring 157% year-over-year in the last quarter alone. Major enterprises like Alaska Airlines, Toyota (NYSE:TM), and Walmart (NYSE:WMT) are increasingly shifting their AI projects into production on Azure, underscoring its role as a trusted platform for large-scale deployments. To balance its ecosystem, Microsoft has tweaked its partner incentives, ensuring both AI and non-AI workloads receive attention, a move that addresses earlier concerns of an overly AI-focused strategy. This adjustment, paired with Azure’s meteoric rise, positions Microsoft as a leader in the competitive cloud computing market, making it a top pick for investors searching for the best AI stocks to buy now.

Financial Strength Fuels Microsoft’s Ambitious Investments

Beyond AI, Microsoft’s financial firepower bolsters Piper Sandler’s confidence. The company’s annual operating cash flow, surpassing $100 billion, provides ample runway for aggressive investments, including an eye-popping $80 billion in capital expenditure and lease spending for fiscal year 2025. This massive outlay is meticulously aligned with short-term demand signals while laying the groundwork for a “global, fungible, and flexible” data center fleet designed to meet long-term AI inferencing needs. Tied to a staggering $298 billion contracted backlog, this infrastructure push reflects Microsoft’s commitment to scaling its cloud and AI capabilities to unprecedented levels. Unlike competitors who might overextend, Microsoft’s data center strategy is built for adaptability, ensuring it can pivot to meet evolving customer demands, from intensive AI training to real-time inference workloads. For investors eyeing long-term growth stocks with strong fundamentals, this blend of financial discipline and forward-thinking investment makes Microsoft a standout contender.

Capital Expenditure Breakdown: What $80 Billion Buys

Microsoft’s $80 billion investment isn’t just a number; it’s a strategic blueprint for future dominance. This spending targets a global network of data centers that can flexibly support AI workloads, cloud services, and enterprise needs. The $298 billion contracted backlog, while not publicly itemized, likely represents committed Azure spending from enterprise clients, providing revenue visibility that justifies this scale. This approach ensures Microsoft can handle the computational demands of tomorrow’s AI innovations, a critical factor for investors researching Microsoft stock price predictions.

Project Stargate: Supercharging the OpenAI Partnership

Project Stargate, a colossal $100 billion collaboration with OpenAI, has sparked debate about its impact on Microsoft’s partnership with the AI pioneer, but Piper Sandler dismisses these concerns with compelling evidence. Microsoft retains API exclusivity, perpetual intellectual property rights, and the right of first refusal on infrastructure needs, cementing its pivotal role in OpenAI’s ecosystem. Far from straining ties, Stargate amplifies Microsoft’s strategic advantage, especially as OpenAI’s demand for GPU capacity surges to fuel its next-generation AI models. With a potential launch by 2028 and a budget that could climb as high as $500 billion, Stargate promises to deliver a supercomputer capable of powering unparalleled AI training and inference tasks. Piper Sandler views this as a complementary move, enhancing Microsoft’s position as a linchpin in both Azure’s growth and OpenAI’s ambitions, making it a must-watch for those researching AI investment opportunities.

How Stargate Strengthens Microsoft’s AI Ecosystem

Stargate isn’t just a side project; it’s a cornerstone of Microsoft’s AI strategy. By securing exclusive API access and IP rights, Microsoft ensures it remains the primary gateway for OpenAI’s innovations, while the right of first refusal on infrastructure keeps competitors at bay. This synergy could accelerate Azure’s adoption for AI workloads, further solidifying Microsoft’s edge in the cloud computing market.

Is the 11% Stock Drop a Buying Signal?

The recent 11% decline in Microsoft’s stock, dropping from approximately $421.50 on December 31, 2024, to $378.80 by March 28, 2025, might alarm short-term traders, but Piper Sandler sees it as a rare chance to buy into a tech titan at a discount. The firm’s analysis points to Microsoft’s commercial remaining performance obligations (RPO), which grew 34% year-over-year, as a testament to its locked-in future revenue streams. Coupled with a diversified business spanning Azure, Microsoft 365, and its AI ventures, this resilience suggests the stock’s current weakness is a temporary blip rather than a structural flaw. For investors wondering how to invest in Microsoft stock amidst market volatility, Piper Sandler’s stance offers a clear signal: the company’s triple-digit AI growth, massive cash reserves, and strategic partnerships outweigh near-term headwinds.

Key Metrics Supporting the Bullish Case

To provide a clearer picture, here are two tables summarizing critical financial and project-related metrics driving Piper Sandler’s bullish case:

Metric	Value	Source
Stock Decline (3 Months)	~11%	Yahoo Finance MSFT
AI Business Annual Run Rate	$13 billion	Microsoft Q2 FY25 Earnings
Azure Revenue Growth (Q2 FY25)	31%	Microsoft Earnings Release
Capital Expenditure (FY25)	$80 billion (projected)	NY Times Microsoft Earnings
Contracted Backlog	$298 billion (claimed)	Piper Sandler Analysis (not independently verified)

Project Stargate Details	Details	Source
Budget Range	$100 billion to $500 billion	Fortune Stargate Article
Launch Target	2028	Tom's Guide Stargate
Microsoft Rights	API Exclusivity, IP Rights, Right of First Refusal	The Verge Stargate Update

Microsoft’s Path to Long-Term Dominance

Piper Sandler’s unwavering faith in Microsoft rests on a trifecta of strengths: a broad product suite that caters to diverse enterprise needs, a thriving AI business poised to reshape industries, and a financial foundation that supports ambitious growth initiatives. While the stock’s recent slide might deter the faint-hearted, the firm’s detailed insights into Azure’s momentum, capital spending foresight, and the OpenAI partnership paint a picture of a company on the cusp of a transformative era. For those scouring the market for the best tech stocks for long-term investment, Microsoft’s current valuation, paired with its AI-driven upside, could signal a rare entry point into a juggernaut built to weather storms and seize opportunities. As the tech giant continues to innovate and expand, Piper Sandler’s call to action resonates: now might be the moment to bet big on Microsoft’s future.

Key Citations

• Microsoft Q2 FY25 Earnings Release Long Title
• Yahoo Finance MSFT Stock Price History Long Title
• New Microsoft Partner Program Investments Include Millions Long Title
• Microsoft and OpenAI's Stargate Project $100 Billion Supercomputer Long Title
• The Verge's Coverage of Stargate Project and Microsoft OpenAI Partnership Long Title
• NY Times Article on Microsoft Earnings and AI Spending Long Title
• Tom's Guide Article on Stargate AI Supercomputer by Microsoft and OpenAI Long Title