Savvy investors prioritize adding growth stocks to their portfolios as they can offer consistent returns over the long term. Microsoft (MSFT -1.27%) is one such stock that has seen its shares rise 190% over the last five years despite market declines in 2022. 

The company's stock is down 28% since January as rises in inflation reduced consumer spending and sent dozens of stocks tumbling over the last few months. And yet these macroeconomic factors have not hindered Microsoft's long-term prospects. The company is home to in-demand brands across multiple industries, with some promising developments still to come.

Its stock may have suffered a double-digit fall this year, but that only makes Microsoft shares more attractive right now. Here's why.

Still ahead of the competition 

While Microsoft's 28% dip in its stock price in 2022 looks concerning, it helps to remember that the stock is actually faring better than many other companies in the tech industry (the Nasdaq-100 Technology Sector index is down 37% since January). Fellow tech giants Alphabet, Amazon, and Meta Platforms saw their stocks plummet roughly 34%, 45%, and 68%, respectively, in 2022.

Microsoft's diversified stable of businesses helped save it from the worst industry declines. The Windows company's robust business also kept it growing despite an economic downturn. For example, in Microsoft's first quarter of fiscal 2023 (ended Sept. 30), revenue grew 11% year over year to $50.12 billion, with operating income growing by 6% to $21.5 billion. The company's More Personal Computing segment suffered a slight decline amid a poor PC market, but 20% year-over-year revenue growth in Intelligent Cloud and a 9% increase in Productivity and Business Processes picked up the slack. 

Moreover, as fears of a recession in 2023 continue to grow, a company's free cash flow is becoming an increasingly crucial metric. In this regard, Microsoft is sitting at the top of the pack compared to the tech giants mentioned above. 

MSFT Free Cash Flow Chart

MSFT Free Cash Flow data by YCharts

With $63.3 billion in free cash flow, Microsoft is better equipped than its peers to overcome further economic declines and continue investing in its business. 

What's on the horizon for Microsoft?

Even with potential economic headwinds in 2023, Microsoft has plenty of future developments for investors to be bullish about.

The company's fastest-growing part of its business over the last few years has been its cloud computing service, Azure. Launched in 2010, Azure's market share in cloud computing has grown significantly and it now accounts for 21% of the cloud market (in second place to Amazon Web Services with 34%). CEO Satya Nadella revealed on Nov. 16 that the company is building more data centers in Asia, calling it a "massive growth market."

The $368.97 billion cloud computing market is forecast to expand at a compound annual growth rate of 14.8% through 2030. Microsoft is positioning itself to capture more than its current share of that growth.

Microsoft may be in for a significant boost to its Xbox gaming brand in 2023 as it works to complete its $68.7 billion acquisition of Activision Blizzard (ATVI). The game developer is home to one of the most profitable franchises in the world, Call of Duty. If it gets the necessary regulatory approvals, according to Microsoft, the acquisition will make it the world's third-largest games company after Tencent and Sony. Additionally, owning Activision's lucrative game library will likely go a long way in growing Microsoft's game subscription service, Xbox Game Pass, as it attracts more members to the service and consoles. 

Along with a new partnership with Netflix to bring an ad-supported tier to the streaming service and a partnership with Nvidia to build a supercomputer in the near future, Microsoft is doing what it takes to retain its position as a growth stock through constant innovation.

With cash in the bank and a price-to-earnings ratio of 26, now is an excellent time to buy Microsoft on the dip.