For the last couple of years, it's been easy to group the "Magnificent Seven" together. These massive companies have become the dominant tech players and have taken advantage of artificial intelligence (AI) like no other group of companies in the market.
But once President Donald Trump took office and enacted sweeping tariffs, the group began to diverge based on how tariffs impacted their supply chains and the types of products and services they sold.
Microsoft (MSFT 0.68%) has been one of the strongest, most resilient performers in the group. Is it time to double down on Microsoft stock today?
Riding Azure's momentum
While all the companies in the Magnificent Seven operate in the tech sector, most of them have been able to develop diversified revenue streams. Microsoft has many unique tech businesses, including cloud services, Microsoft Office 365 products, gaming, LinkedIn, search and advertising, and more.
Luckily for Microsoft, many of these businesses are services the company provides and therefore are less impacted by tariffs, which likely explains its strong performance in 2025 (as of June 3).
But a big reason for the company's strong performance is Azure, which falls under the company's cloud services and products category. Azure and other cloud services revenue in the company's third fiscal quarter of 2025 (quarter ended March 31, 2025) grew 35% year over year.
Azure is the foundation of Microsoft's artificial intelligence offerings and business. Launched in 2010, Azure started as a cloud computing network of data centers that companies could run their business on instead of maintaining their own infrastructure.
Since then, Azure has branched out to offer numerous other products, including in artificial intelligence. Through a partnership with OpenAI, Azure provides AI models that developers and businesses can leverage to build their own AI applications. Microsoft has also integrated AI tools from Azure into its own applications, such as Microsoft 365 Copilot, to automate repetitive tasks and improve efficiency.
Image source: Getty Images.
Many investors questioned Microsoft's significant capital expenditures (capex) on AI over the last two to three years, wondering when they would see a payoff, which has now started to play out. Interestingly, on the company's most recent earnings call, Microsoft CFO Amy Hood pointed out that it's getting harder to separate AI-related revenue from non-AI-related revenue, as the two are starting to feed off of one another.
Evercore analyst Kirk Materne raised his price target on Microsoft from $500 to $515 in late May and maintained a buy rating on the company. Materne said that not only is Microsoft all in on AI, but the more traditional cloud business also still has plenty of runway, considering only around 20% of information technology workloads run in the cloud today -- a number Materne thinks could eventually increase to 80%. And AI tools could be a way to bring more businesses onto the cloud. Materne estimates that Microsoft's AI revenue could reach upwards of $110 billion by fiscal year 2028.
Time to double down?
There are several reasons to double down on Microsoft. For one, it is arguably the company least impacted by tariffs in the Magnificent Seven. As Morningstar points out, the company "has minimal risk exposure to retail, advertising spending, cyclical hardware, or physical supply chains." This should make it more resilient as the trade war continues to play out.
Microsoft's cloud and AI business is also starting to thrive. The company is reaping benefits from all the capex spending and is well-positioned to further grow revenue as the digital transformation of the business world continues to progress. Finally, Microsoft is one of just a few companies in the world to hold the highest possible credit rating from both Moody's and S&P Global. This makes it a source of stability throughout the economic cycle.
