Microsoft (MSFT -0.14%) has retreated a bit from its 12-month high of $116.18. That creates a buying opportunity if you believe the company's best days are still ahead of it.

Microsoft fell victim to market trends. It was hurt by a general technology sector sell-off triggered by worries over whether Apple iPhone sales were in for a long-term slowdown. But market panic does not change business reality, and Microsoft remains in a very strong position.

A Microsoft sign on one of its campuses.

Microsoft had a strong first quarter of its fiscal 2019. Image source: Microsoft.

What do the numbers say?

The company reported an impressive start to its fiscal 2019. In the first quarter, it saw revenue increase by 19% to $29.1 billion, while earnings per share rose by 36% to $1.14.

In her remarks in the Q1 earnings release, CFO Amy Hood lauded the numbers while also pointing out that they weren't a one-time phenomenon: "Our record results for Q1 reflect our commitment to long-term strategic investments and consistent execution to drive revenue growth and operating margin expansion. We see continued demand for our cloud offerings, reflected in our commercial cloud revenue of $8.5 billion, up 47% year over year."

The company also returned $6.1 billion to shareholders through dividends and share repurchases. That's up 27% from the year-ago quarter, and CEO Satya Nadella said that the company has built a strong foundation: "We are off to a great start in fiscal 2019, a result of our innovation and the trust customers are placing in us to power their digital transformation. We're excited to help our customers build the digital capability they need to thrive and grow, with a business model that is fundamentally aligned to their success."

A time to buy

Microsoft saw improvement across all it business sectors in Q1:

  • Productivity and Business Processes: up 19% to $9.8 billion.
  • Intelligent Cloud: up 24% to $8.6 billion.
  • More Personal Computing: up 15% to $10.7 billion.

Those are strong revenue numbers, and Microsoft's business model lends itself to predictability. The company has built a lot of its business on recurring revenue. It's adding consumers to its ecosystem and growing its customer/subscriber base.

During the Q1 earnings call, Nadella explained why the company is in good shape for the long term. His remarks show he's not managing the company for a quarterly result:

Every organization today needs tech intensity to compete and grow in an increasingly digital world. There are two aspects to this. Think of it as a simple equation: First, every organization needs to be a fast adopter of best-in-class technology; second, they will need to build their own proprietary digital capability. Our cloud platforms and tools enable our customers to build tech intensity, while ensuring we are addressing the tough questions around trust: both trust in technology and trust that they have a partner whose business model is aligned to their success. No customer wants to be dependent on a provider that sells them technology on one end and competes with them on the other. Getting this equation right is key to their success going forward. Microsoft is uniquely positioned to help.

Nadella understands the role his company has to play going forward. That's dramatically more important than the strategy around any one product. It's a mission statement (albeit a wordy one) that shows Microsoft is on the right path -- and that any dips in its share price are buying opportunities, not reasons to worry.