1 "Magnificent Seven" Stock You'll Regret Not Buying During the Dip

Core Viewpoint - The "Magnificent Seven" stocks, including Microsoft, have faced a collective decline due to various factors, including the announcement of new tariffs by President Trump, presenting a potential buying opportunity for investors [1][2]. Group 1: Impact of Tariffs on Microsoft - Microsoft heavily relies on imported electronic parts and raw materials for its consumer electronics and Azure data centers, which may become more expensive due to new tariffs [3]. - The company has three options in response to increased costs: pass costs to customers, absorb costs, or delay/cancel data center expansion plans [4]. - Microsoft has already pulled back from some data center expansion plans, indicating a potential preference for absorbing costs or delaying expansion [4]. Group 2: Microsoft Azure's Growth - Microsoft's Intelligent Cloud segment, which includes Azure, generated $25.5 billion in revenue in Q2 of fiscal year 2025, marking a 19% year-over-year increase and accounting for over 36% of total revenue [7]. - Azure is the second-largest cloud service provider, trailing Amazon Web Services (AWS), but has shown impressive growth and competitiveness in the market [8]. - The cloud services industry is still expanding, providing significant growth opportunities for Azure as more companies transition to cloud operations [8]. Group 3: Microsoft's Resilience and Revenue Stability - Microsoft has built a comprehensive ecosystem across various industries, making it the most recession-resistant among the "Magnificent Seven" [9]. - The company generates consistent and recurring revenue, particularly from enterprise clients who are less likely to cut spending on essential software and electronics during economic downturns [10][11]. - While a slight slowdown in revenue may occur, Microsoft's financials are expected to remain stable and predictable in the long term [11]. Group 4: Dividend and Total Returns - Microsoft has been paying dividends since 2003, increasing its annual dividend for 23 consecutive years and by over 160% in the past decade [14]. - Although the dividend yield is below 1%, it contributes significantly to total returns, with Microsoft's stock price increasing approximately 810% over the past decade and total returns around 960% [16]. - The combination of dividends and stock growth potential offers a compelling investment opportunity for investors [16].